Inflation Quiz

What is the effect of inflation on purchasing power?

• It increases purchasing power

• It decreases purchasing power

• It has no effect on purchasing power

• It depends on the rate of inflation

How do economists measure inflation?

• By analyzing stock market trends

• By conducting surveys of consumer preferences

• By calculating the average price of goods and services

• By monitoring government spending

What is the Consumer Price Index (CPI) used for?

• To calculate the rate of inflation

• To determine the highest grossing movies of all time

• To adjust prices from the past into today's dollars

• To measure the overall price levels in a country

What does the term 'real' mean in relation to prices?

• Prices that have been adjusted for inflation

• Prices that haven't been adjusted for inflation

• Prices that are influenced by market trends

• Prices that are based on consumer preferences

What causes demand-pull inflation?

• A decrease in consumer spending

• Too much money chasing too few goods

• A decrease in the availability of productive resources

• An increase in production costs

What is a supply shock?

• A sudden increase in the availability of productive resources

• A decrease in production costs

• A sudden decrease in the availability of an important resource

• An increase in consumer spending

Which country has been experiencing deflation?

• China

• Venezuela

• Japan

• United States

What is the main cause of the housing bubble in the early 2000s?

• A decrease in demand for housing

• A decrease in population

• A shortage in building materials

• Low interest rates and deceitful lending practices

What is the term used to describe the global rise in home prices in the early 2000s?

• Stock market bubble

• Internet bubble

• Tulip mania

• Housing bubble

What is the main lesson to learn from understanding inflation?

• How to negotiate a raise at work

• The importance of saving money

• The impact of economic mismanagement

• The dangers of speculative bubbles