NEW
Font size
WorksheetsIB Economics (SL): Macroeconomic objectives: Inflation
Total questions: 10
Worksheet time: 5mins
Inflation is the sustained increase in the price of a product
True
False
The CPI measures the cost of goods and services in a typical household in the economy.
True
False
Which of the following is NOT a limitation of the CPI?
Consumers changing their consumption patterns due to changing prices
Comparisons over long periods of time (more than 10 years) are difficult
Consumers tend to be loyal to particular products so their consumption patterns will not really change.
Not all consumers will consume what is in the 'typical' basket of goods and services
The purchasing power of your income is called your
real income
nominal income
Which of the following is NOT a consequence of inflation?
low menu costs
high levels of uncertainty
a false sense of the value of money
reduced export competitiveness
Which of the following groups is likely to be better off in times of inflation?
Pensioners
Savers
Borrowers
Lenders
What would most governments consider an acceptable rate of inflation?
0 - 1%
1 - 2%
2 - 3%
3 - 4%
The diagram represents which type of inflation?
demand-pull
cost-push
Which of the following is NOT a reason why deflation rarely happens?
Firms try to avoid additional menu costs
Firms cannot reduce their unit costs
The fear of price wars
The inflexibility of wages
Which type of deflation is often referred to as 'bad' deflation
That caused by increased AS
That caused by decreased AD
