Which federal agency calculates the Consumer Price Index (CPI)?
answer
US Bureau of Labor Statistics
question
Stagflation occurs when high inflation combines with
answer
high unemployment and a low level of production.
question
Why is gasoline weighted more heavily than tomatoes in a calculation of the annual inflation rate in the United States?
answer
Americans spend more money on gasoline than tomatoes, on average.
question
How does demand-pull inflation differ from cost-push inflation?
answer
Demand-pull inflation is driven by consumers, while cost-push inflation is driven by producers.
question
Which scenario is an example of demand-pull inflation?
answer
Consumers have more money to buy cars, and the prices of cars and car accessories rise as a result.
question
Consumers having more money to purchase computers will most likely result in
answer
an increase in prices for computers and computer accessories.
question
Which is an effect of stagflation?
answer
The value of a country's currency drops.
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Typically, low inflation is a sign of
answer
a healthy economy because it results from a steady rise in demand.
question
Which is the best definition of inflation?
answer
a gradual increase in the price of goods and services
question
Typically, high inflation is a sign of
answer
a struggling economy because wages cannot keep up with the increase in prices.
question
What is one consequence of stagflation?
answer
The economy drastically slows down as money loses its buying power.
question
Demand-pull inflation happens when the demand for goods
answer
increases
question
What are the signs of high inflation? Check all that apply.
answer
Production begins to fall.
Interest rates increase.
Purchasing power falls.
Fewer fixed rate bank loans.
question
The inflationary spiral explains the causes and effects of high inflation.
The spiral usually begins with an increase in demand. What is the direct effect of this increase?
answer
Producers raise prices to continue to make a profit.
question
Hyperinflation can occur when
answer
the government prints a ton of money in order to pay off its debt.
question
Which scenario is an example of cost-push inflation?
answer
An increase in workers' wages raises the production cost of cars, and car prices rise as a result.
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