AnswersGalliWCA 2221 CivicsEconomics 1st nine weeks 26-27Introduction to Macroeconomics

Inflation and Stagflation Answers

10 verified answers1 views
1
Free Preview

Which is the best definition of inflation?

A
a gradual decrease in the price of goods and services
B
a gradual increase in the price of goods and services
C
an exponential decrease in the price of goods and services
D
an exponential increase in the price of goods and services
2
Free Preview

What are the signs of high inflation? Check all that apply.Production begins to fall.Production begins to rise.Interest rates decrease.Interest rates increase.Purchasing power falls.Fewer fixed rate bank loans.

A
Production begins to fall.
B
Production begins to rise.
C
Interest rates decrease.
D
Interest rates increase.
E
Purchasing power falls.
F
Fewer fixed rate bank loans.
3

The equation calculates an annual rate in economics.What rate does the equation calculate?

Question illustration
A
employment rate
B
inflation rate
C
demand rate
D
supply rate
4

Hyperinflation can occur when

A
consumers begin purchasing more goods.
B
producers need more money to make and distribute goods.
C
companies raise prices to pass on costs to consumers.
D
the government prints a ton of money in order to pay off its debt.
5

Typically, high inflation is a sign of

A
a healthy economy because it results from a fall in production costs.
B
a healthy economy because it results from a rise in consumer interest.
C
a struggling economy because wages cannot keep up with the increase in prices.
D
a struggling economy because it results from a fall in consumer interest.
6

Why is gasoline weighted more heavily than tomatoes in a calculation of the annual inflation rate in the United States?

A
Gasoline costs more to produce and purchase than tomatoes.
B
Gasoline is imported from other nations at a higher rate than tomatoes.
C
Americans purchase many more boxes of tomatoes than barrels of gasoline.
D
Americans spend more money on gasoline than tomatoes, on average.
7

Demand-pull inflation happens when the demand for goods

A
remains very low.
B
shifts up and down.
C
matches the supply.
D
increases.
8

Which is an effect of stagflation?

A
Trade with other economies increases.
B
The value of a country’s currency drops.
C
Prices for goods fall sharply and suddenly.
D
The GDP rises along with production levels.
9

Consumers having more money to purchase computers will most likely result in

A
a decrease in prices for computers and computer accessories.
B
an increase in prices for computers and computer accessories.
C
a decrease in prices for computers, but not computer accessories.
D
an increase in prices for computers, but not computer accessories.
10

Which scenario is an example of cost-push inflation?

A
Consumers have more money to buy cars, and the prices of cars and car parts rise as a result.
B
An increase in workers’ wages raises the production cost of cars, and car prices rise as a result.
C
The demand for cars falls as consumers have less disposable income, and car prices fall as a result.
D
A government bailout helps car manufacturers lower their costs, and car prices fall as a result.
11

The graph shows changes in the US economy between 1971 and 2001.According to the graph, 1971 to 1976 was a period of stagflation due to

Question illustration
A
rising unemployment and inflation.
B
falling unemployment and inflation.
C
rising unemployment and falling inflation.
D
falling unemployment and rising inflation.
12

How does demand-pull inflation differ from cost-push inflation?

A
Demand-pull inflation is driven by consumers, while cost-push inflation is driven by producers.
B
Demand-pull inflation is driven by producers, while cost-push inflation is driven by consumers.
C
Demand-pull inflation is driven by the private sector, while cost-push inflation is driven by the government.
D
Demand-pull inflation is driven by the government, while cost-push inflation is driven by the private sector.
13

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?

A
Producers raise prices to continue to make a profit.
B
The government prints more money, lowering the value of money.
C
Workers negotiate with employers to receive more money.
D
Consumers need higher wages to keep up with rising prices.

Did you find these answers helpful?

More from this Course

Quiz
24 verified answers

Introduction to Macroeconomics

Quiz
18 verified answers

Economic Growth

Quiz
17 verified answers

Introduction to Macroeconomics