Inflation Understanding Check

In 2022, a household's market basket cost $1,200. In 2023, the same basket costs $1,380. If 2022 is the base year, what is the CPI for 2023?

• 115

• 116

• 115.5

• 115.9

If CPI in 2022 is 120 and CPI in 2023 is 132, what is the inflation rate from 2022 to 2023?

• 10%

• 12%

• 8%

• 9%

The market basket in 2020 cost $2,000, in 2021 it cost $2,400, and in 2022 it cost $2,640. Using 2020 as the base year, calculate the CPI for 2022.

• 132

• 124

• 120

• 118

If CPI is 140 in 2024 and 150 in 2025, which of the following is the annual inflation rate?

• 10%

• 6.67%

• 7.14%

• 7%

A market basket in the base year costs $500. In year 2, prices of some goods rise sharply, others fall slightly, but the basket costs $550. CPI for year 2 is:

• 105

• 110

• 115

• 120

If inflation is caused by a rapid increase in consumer confidence and spending, it is best described as:

• Cost-push inflation

• Demand-pull inflation

• Structural Inflation

• Wage-price inflation

A sudden spike in oil prices increases production costs for most firms. This is an example of:

• Demand-pull inflation

• Cost-push inflation

• Hyperinflation

• Disinflation

A government stimulus package leads to a significant increase in household consumption and business investment. Which type of inflation is most likely?

• Demand-pull

• Cost-push

• Staglfation

• Deflation

Which inflation type is most associated with a leftward shift in the aggregate supply curve?

• Demand-pull

• Cost-push

• Imported inflation

• Monetary inflation

A depreciation in the local currency raises the cost of imported goods, leading to a general rise in prices. This is:

• Demand-pull inflation

• Cost-push inflation

• Asset price inflation

• None of the above