Worksheetsib econs chapter 20
Total questions: 35
Worksheet time: 2hrs 45mins
Name
Class
Date
1.
What is inflation?
a)
A one-time increase in prices
b)
A sustained rise in the average price level
c)
A decrease in the money supply
d)
An increase in purchasing power
2.
How is the inflation rate typically measured?
a)
GDP deflator
b)
Consumer Price Index (CPI)
c)
Producer Price Index (PPI)
d)
Unemployment rate
3.
In the CPI, what does the base year index number represent?
a)
90
b)
100
c)
50
d)
200
4.
If the CPI increases from 120 to 132, what is the inflation rate?
a)
0.1
b)
0.12
c)
0.0909
d)
0.08
5.
What is the purpose of using statistical weights in CPI?
a)
To reflect the importance of each item in household spending
b)
To reduce the number of items in the basket
c)
To increase the base year index
d)
To eliminate inflation
6.
In a weighted CPI calculation, if the price of a product with a higher weight increases, how does it affect the CPI?
a)
It has a larger impact on CPI
b)
It has a smaller impact
c)
No impact
d)
It decreases CPI
7.
Calculate the inflation rate between 2019 (CPI 110) and 2020 (CPI 122.5).
a)
0.1
b)
0.1136
c)
0.125
d)
0.225
8.
In the weighted CPI example, why was the inflation rate higher than in the unweighted example?
a)
Different base year
b)
Different quantities purchased
c)
Higher prices in 2020
d)
Different products in the basket
9.
Which is NOT included in the CPI?
a)
Goods
b)
Services
c)
Stocks and bonds
d)
Housing costs
10.
If the base year CPI is 100 and the current year CPI is 117, what is the inflation rate since the base year?
a)
0.17
b)
0.017
c)
0.085
d)
1.17
11.
Which is a limitation of CPI?
a)
Includes regional price variations
b)
Accounts for product quality
c)
Uses a fixed basket not reflecting current consumption
d)
Includes financial assets
12.
Why might CPI not reflect high-income households?
a)
Uses their specific consumption
b)
High-income households spend more on luxury goods
c)
Includes their taxes
d)
Uses value weights
13.
How do time lags affect CPI?
a)
Increase precision
b)
Data may be outdated
c)
Reduce basket size
d)
Eliminate regional disparities
14.
Which is NOT a limitation of CPI?
a)
Changes in product quality
b)
Regional differences
c)
Reflects current consumption immediately
d)
Atypical households
15.
Demand-pull inflation is caused by:
a)
Increase in aggregate demand
b)
Decrease in production costs
c)
Leftward SRAS shift
d)
Higher taxes
16.
Which AD component causes demand-pull inflation?
a)
Consumption
b)
Imports
c)
Taxes
d)
Savings
17.
Cost-push inflation is shown by:
a)
Rightward AD shift
b)
Leftward SRAS shift
c)
Rightward LRAS shift
d)
Decreased money supply
18.
What causes cost-push inflation?
a)
Lower wages
b)
Higher corporate taxes
c)
Decreased import prices
d)
Technological advancements
19.
Government spending increases may cause:
a)
Cost-push
b)
Demand-pull
c)
Stagflation
d)
Hyperinflation
20.
Which describes cost-push inflation?
a)
Booming economy
b)
Rising oil prices
c)
Lower interest rates
d)
Higher exports
21.
A cost of high inflation:
a)
Increased purchasing power
b)
Certainty for businesses
c)
Redistribution to lenders
d)
Loss of export competitiveness
22.
How does inflation affect savers?
a)
Real rates increase
b)
Real value decreases if inflation > nominal rate
c)
Encourages saving
d)
No effect
23.
High inflation leads to:
a)
Lower menu costs
b)
Improved allocation
c)
Uncertainty and reduced investment
d)
Higher real wages
24.
Most hurt by inflation:
a)
Borrowers
b)
Savers with fixed rates
c)
Government
d)
Exporters
25.
Inflation redistributes income from:
a)
Debtors to creditors
b)
Creditors to debtors
c)
Fixed-income earners
d)
No effect
26.
Deflation is:
a)
Decreased inflation rate
b)
Sustained fall in price level
c)
Temporary price decline
d)
Increased real GDP
27.
Disinflation refers to:
a)
Fall in price level
b)
Decrease in inflation rate
c)
Negative inflation
d)
Stagflation
28.
Malign deflation is caused by:
a)
Increased SRAS
b)
Decreased AD
c)
Technological improvements
d)
Lower costs
29.
Cost of deflation:
a)
Increased real debt value
b)
Higher consumer spending
c)
Lower real rates
d)
Increased investment
30.
Deferred consumption occurs because:
a)
Rising prices
b)
Falling prices delay purchases
c)
Higher incomes
d)
Low unemployment
31.
Benign deflation caused by:
a)
Falling AD
b)
Rising SRAS
c)
Higher taxes
d)
Lower productivity
32.
Deflation affects unemployment by:
a)
Reducing it
b)
Increasing due to lower AD
c)
No effect
d)
Structural rise
33.
Inflation rate drops from 5% to 3%:
a)
Deflation
b)
Disinflation
c)
Stagflation
d)
Reflation
34.
Cost of deflation:
a)
Increased real debt burden
b)
Higher exports
c)
Stimulated investment
d)
Higher confidence
35.
Common cost of high inflation and unemployment:
a)
Slower economic growth
b)
Higher competitiveness
c)
Improved allocation
d)
Increased spending
100 %
