Economic Cycles and Inflation Quiz

Normalization is not a recognized phase of the business cycle.

Inflation typically increases during an economic expansion.

CPI (Consumer Price Index) is a measure of inflation.

A prolonged period of economic decline is referred to as a recession.

Unemployment typically reaches its lowest point during the expansion phase of the business cycle.

Hyperinflation is a situation where prices rise rapidly, eroding purchasing power.

Cost-push inflation is characterized by increased production costs.

Phillips curve theory suggests a trade-off between inflation and unemployment.

Open market operations are a tool used by central banks to control inflation.

Demand-pull inflation is primarily caused by an increase in aggregate demand.

The quantity theory of money posits a direct relationship between money supply and inflation.

High inflation can lead to reduced real wages.