Bellringer Crash Course 7

What happens to an individual's purchasing power when prices for goods and services increase?

• It increases.

• It decreases.

• It remains the same.

• It depends on the individual's income.

What is the Consumer Price Index (CPI)?

• A measure of a country's total economic output.

• A statistical estimate constructed using the prices of a sample of representative items whose prices are collected periodically.

• The total amount of money circulating in an economy.

• A list of the highest-grossing movies of all time.

In economics, what does "real" mean when referring to a price from the past?

• The price has been adjusted for inflation.

• The price has not been adjusted for inflation.

• The actual price paid at the time, without any changes.

• The price of a physical good, not a service.

What are some limitations of a traditional Consumer Price Index (CPI)?

• It cannot account for changes in currency exchange rates.

• It does not adjust for new products or increases in product quality.

• It only measures prices in the current year.

• It is only used to compare movie box office sales.

What is a primary cause of demand-pull inflation?

• A decrease in the availability of productive resources.

• Too much money chasing too few goods.

• An increase in the cost of delivering goods.

• Producers raising prices due to higher production costs.

Which scenario best describes cost-push inflation?

• Consumers having more money and bidding up prices for goods.

• An increase in the overall money supply in the economy.

• A shortage of a key resource, leading to higher production costs and reduced supply.

• Increased popularity of a product leading to higher demand.

What contributed to the soaring prices and hyperinflation in Venezuela?

• A stable economy with consistent oil exports.

• The government printing more money and reduced oil exports.

• Increased demand for luxury goods by consumers.

• A global increase in the price of cocoa beans.

What is a key characteristic of an economic bubble driven by speculation?

• Prices are directly tied to the fundamental value of the asset.

• Buyers expect to sell the asset at an even higher price to the next person.

• The supply of the asset significantly decreases due to external factors.

• Government intervention stabilizes prices and prevents rapid increases.