#1
Which of the following best defines inflation?
A sustained increase in the general price level of goods and services in an economy over a period of time
ExplanationInflation: persistent rise in overall prices.
#2
Which of the following is NOT a commonly used measure of inflation?
Gross Domestic Product (GDP)
ExplanationGDP: measure of economic activity, not inflation.
#3
What is the 'core inflation' rate?
The inflation rate excluding volatile food and energy prices
ExplanationCore inflation: excludes volatile items like food, energy.
#4
How does inflation affect borrowers and lenders?
Inflation benefits borrowers and harms lenders
ExplanationInflation: borrowers gain, lenders lose.
#5
What is hyperinflation?
An extremely rapid and out-of-control inflation where prices skyrocket uncontrollably
ExplanationHyperinflation: uncontrollable, rapid price increases.
#6
Which of the following is a consequence of deflation?
Decreased purchasing power
ExplanationDeflation: reduces purchasing power.
#7
What is the difference between 'headline inflation' and 'core inflation'?
Headline inflation includes all goods and services, while core inflation excludes volatile items like food and energy.
ExplanationHeadline vs. core inflation: inclusion of volatile items.
#8
Which of the following is an example of 'disinflation'?
Inflation rate decreasing from 6% to 2%
ExplanationDisinflation: slowing of inflation.
#9
What is the difference between 'demand-pull' and 'cost-push' inflation?
Demand-pull inflation is caused by an increase in aggregate demand, while cost-push inflation is caused by a decrease in production costs.
ExplanationDemand-pull: due to increased demand. Cost-push: due to production costs.
#10
What is the 'Shoe-leather cost' associated with inflation?
The cost of time and effort spent on frequent trips to the bank to withdraw cash
ExplanationShoe-leather cost: time, effort spent accessing cash.
#11
Which of the following is a measure of anticipated inflation?
Nominal interest rates
ExplanationAnticipated inflation: reflected in nominal interest rates.
#12
What is the Phillips curve?
A curve representing the relationship between the unemployment rate and the inflation rate
ExplanationPhillips curve: shows link between unemployment, inflation.
#13
What is the 'Fisher effect'?
An economic principle stating that nominal interest rates move in tandem with inflation rates
ExplanationFisher effect: nominal interest rates, inflation move together.
#14
Which of the following is a consequence of stagflation?
High inflation and low economic growth
ExplanationStagflation: inflation, low growth.