Money and Inflation-Day 3

When inflation spirals out of control, it is called ​ (a)   (when prices increase by more than 50% per month).

• hyperinflation
• deflation
• inflation

What inevitably leads to economic collapse. (a)  

• inflation
• recession
• hyperinflation
• deflation

However, long run, persistent inflation is caused by ​ (a)   the money supply.

• increasing
• decreasing

However, long run, persistent deflation is caused by ​ (a)   the money supply.

• decreasing
• increasing

Higher prices mean money is worth ​ (a)   .

• less
• more

Lower prices mean money is worth ​ (a)   .

• more
• less

Which of the following is an example of inflation?

• The price of an iPhone rises as demand increases.

• The price of a TV remains constant as quality improves.

• The average price of a laptop decreases as the money supply increases.

• The average price of groceries increases following an increase in the money supply.

Which of the following is TRUE about inflation?

• All price increases are instances of inflation.

• Inflation happens when the money supply shrinks unexpectedly.

• Inflation in the long run typically follows periods of expansion in the money supply.

• Rapid inflation occurs when the Federal Reserve does not create money.

Which of the following is true about hyperinflation?

• Hyperinflation harms the richest members of a country the most.

• If anticipated, hyperinflation doesn’t have a detrimental effect on economic activity.

• Hyperinflation boosts the value of long term savings.

• Hyperinflation decreases the purchasing power of money.

Reorder the following:

• More money

• money worth less

• higher prices (inflation)