Inflation

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The main reason why the price of goods and services increase overtime is because of

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inflation

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The Bureau of Labor Statistics measures inflation by using what is called the

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Consumer Price Index (CPI).

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When there is high inflation, the loss of buying power especially hurts those who are on fixed incomes.

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who are on fixed incomes.

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The group of goods and services selected and used to measure inflation is referred to as a/an

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Market Basket.

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In the U.S., deflation occurs

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rarely

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Demand-pull inflation often occurs because a government

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prints too much money.

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____________ By comparing the price change of a market basket of goods and services over time, we can determine the rate of inflation or deflation.

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True

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____________Higher prices of resources which are needed to produce goods or services pulls down all prices, thus, causing inflation.

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False

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____________When a government prints lots of money, people have more money to bid up prices which causes inflation. Economists refer to this as “too much money chasing too few goods.”

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True

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____________During deflation there is too much of everything for sale, but not enough people who want or can afford to buy.

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True