IG Econ - Inflation - Advanced

If an economy experiences a sustained increase in the general price level, which economic problem might households face when trying to maintain their standard of living?

• Deflation

• Inflation

• Cost-push inflation

• Disinflation

A country’s central bank is concerned because the prices of most goods and services have been falling for several consecutive months. Which term best describes this situation?

• Disinflation

• Inflation

• Deflation

• Cost-push inflation

Which statistical measure is most commonly used to track changes in the average price level paid by consumers for a fixed set of goods and services over time?

• GDP

• Consumer Price Index (CPI)

• Price elasticity of demand

• Real income index

When constructing a price index, what do economists call the collection of goods and services that represent typical purchases by households?

• Weighting

• Basket of goods

• Price level

• Base year

In the Consumer Price Index, some items are given a higher influence on the final calculation because:

• they are more frequently purchased by consumers.

• they are luxury items.

• they are imported goods.

• they are seasonal products.

Suppose an economy is growing rapidly because consumers, businesses, and the government are all spending more, causing overall demand to outpace supply. Which type of inflation is most likely to occur?

• Cost-push inflation

• Deflation

• Demand-pull inflation

• Disinflation

If the price of oil rises sharply, leading to higher transportation and production costs across the economy and causing firms to increase their prices, what type of inflation is this?

• Demand-pull inflation

• Disinflation

• Cost-push inflation

• Deflation

As a result of inflation, each unit of currency can buy fewer goods and services than before. What economic concept does this describe?

• Weighting

• Price level

• Purchasing power

• Base year

Which term describes the average of current prices for goods and services in an economy, often used to compare how expensive things are from year to year?

• Price level

• Basket of goods

• Weighting

• Disinflation

When calculating a price index, what is the name of the specific year chosen for comparison, where the index is set to 100?

• Weighting

• Inflation year

• Base year

• Reference price