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WorksheetsInflation
Total questions: 13
Worksheet time: 20mins
The rate of inflation is most commonly measured by use of
a price deflator
the GDP deflator
the consumer price index
all of the above
The consumer price index measures
the cost of buying a fixed basket of goods and services, and calculating how this cost changes from year to year
the cost of buying a basket of goods and services, which changes from year to year depending on the price level
the cost of buying a basket of goods and services, which changes from year to year depending on consumer tastes and preferences
all of the above, depending on what the CPI is trying to measure
The redistribution effects of a high rate of inflation may involve losses for _____________________ and gains for _____________________.
lenders/borrows
borrowers/savers
borrowers/lenders
savers/holders of cash
A high rate of inflation is likely to have all of the effects listed below except
uncertainty for business
reduced saving
efficiency losses
greater export competitiveness
An increase in aggregate demand is likely to lead to
demand-push inflation
cost-push inflation
demand-pull inflation
cost-pull inflation
Demand-pull inflation and cost-push inflation differ in that
demand-pull leads to lower real GDP and cost-push to higher real GDP
demand-pull leads to higher real GDP and cost-push to lower real GDP
demand-pull leads to greater unemployment and cost-push to lower unemployment
a combination of the above, depending on the size of AD and SRAS shifts
An increase in aggregate demand may not always lead to demand-pull inflation in
a monetarist new classical model
the Keynesian model
the short run
the long run
Deflation may be a more serious problem than inflation because it may lead to
a deflationary spiral
a serious demand-deficient unemployment
a banking crisis
all of the above
An inflationary gap involves
cyclical unemployment greater than the natural rate of unemployment
unemployment equal to the natural rate of unemployment
cyclical unemployment less than the natural rate of unemployment
zero cyclical unemployment and unemployment less than the natural rate of unemployment
Disinflation is
a fall in the price level
a decreasing rate of inflation
an increasing rate of inflation
no change to inflation or deflation
Which of these is not a problem with the consumer price index (CPI)?
The CPI does not take into account changes of product quality over time.
The CPI does not take into account changes in consumption patterns.
The CPI does not allow for reliable inflation rate comparisons between countries.
The CPI does not measure changes in real GDP over time
Deflation is uncommon in the real world because
wages do not fall easily and firms fear price wars
competitive markets keep prices from falling
governments impose price floors
firms will be unable to sell their products
Consumers may defer consumption when
they face a rising rate of inflation
they face disinflation
the face deflation
they face lower interest rates
