Wonderopolis: What is Inflation?

Inflation affects everyday people by raising the...

• amount of food available

• pollution in the air

• cost of living

• blood pressure

What institution in the U.S. tries to manage inflation with monetary policy?

• The Supreme Court

• Environmental Protection Agency

• The Federal Reserve

• Congress

What is inflation?

• When the government prints more money

• When the supply of goods exceeds demand

• When the value of money drops, causing prices to go up

• When the value of money increases, causing prices to go down

What tool do experts use to measure the effect of inflation?

• Gross Domestic Product (GDP)

• Consumer Price Index (CPI)

• Unemployment Rate

• Interest Rates

What is one cause of cost-push inflation?

• Increase in demand

• Decrease in supply

• Increase in money supply

• Decrease in demand

What was the main idea of this Wonder?

• Inflation is very good for the economy.

• The Federal Reserve should a better job of managing inflation

• Natural disasters can cause temporary inflation in the affected area.

• Inflation is when the value of money drops, causing prices to go up, and is influenced by many factors.

Match the following

• currency

• work done by one person or group to benefit others

• supply

• the money that country uses

• economic

• an official set of rules about money and the economy

• monetary policy

• relating to the system by which goods & services are produced, sold, bought

• services

• the amount of something that is available to be used

When demand for products becomes much larger than the supply, it pushes prices up.

• TRUE

• FALSE

In cost-push inflation demand stays the same, but the supply drops which causes goods to become more expensive.

• TRUE

• FALSE

When inflation grows rapidly and remains in our economy for a long time, this is an indication of a STRONG economy.

• TRUE

• FALSE