Untitled video quiz

What is the primary effect of inflation on prices and the value of money?

• Prices go down, and the value of money goes up.

• Prices go up, and the value of money goes down.

• Prices and the value of money both go up.

• Prices and the value of money both go down.

What type of inflation occurs when there is more demand for a product than there is supply, causing prices to rise?

• Cost-push inflation

• Built-in inflation

• Demand-pull inflation

• Monetary inflation

Why might people feel prices are rising quickly even if the Consumer Price Index (CPI) shows a small overall increase?

• The CPI only measures luxury goods, which are always expensive.

• Essential daily needs like food and milk often increase significantly in price, while less essential items remain stable.

• The government intentionally manipulates CPI data to hide true inflation.

• People tend to exaggerate price increases due to psychological biases.

What is a key reason why a small amount of inflation is considered beneficial for economic growth?

• It encourages people to save more money, strengthening banks.

• It leads to lower wages, making businesses more profitable.

• It motivates consumers to spend money now rather than later, boosting business activity and job creation.

• It makes imported goods cheaper, improving trade balances.

What is the likely effect on inflation if the government significantly increases its spending on large-scale projects?

• Inflation will decrease.

• Inflation will increase.

• Inflation will remain stable.

• Inflation will only be affected if taxes are also adjusted.