Inflation and Bubbles Quiz

What is the main effect of inflation on your income?

• It increases your salary automatically

• It reduces your purchasing power

• It increases the number of goods you can buy

• It lowers prices over time

What does “real” price mean in economics?

• The price you think is fair

• The current market price

• The original price of an item

• The price adjusted for inflation

What does CPI stand for?

• Consumer Price Index

• Cost Percentage Inflation

• Consumer Price Increase

• Current Product Inflation

What is demand-pull inflation caused by?

• A drop in interest rates

• Too much money chasing too few goods

• High production costs

• A decrease in demand

What causes cost-push inflation?

• Increased worker productivity

• Higher costs to produce goods

• Higher taxes on luxury items

• Falling oil prices

Why is deflation bad for the economy?

• It raises people's wages

• It causes higher taxes

• It encourages more spending

• It reduces consumer spending and can lead to job losses

What happened during the housing bubble in the early 2000s?

• Home prices stayed stable

• Home prices rose quickly due to speculation

• Fewer people bought homes

• Interest rates were extremely high

What is a bubble in economics?

• A short-term drop in prices

• A rise in prices based on unrealistic expectations

• A sudden increase in wages

• A government program to increase savings

What caused the price of chocolate to go up recently?

• A bubble

• Increased demand and decreased supply

• Falling consumer interest

• Printing too much money

What’s a historical example of a speculative bubble?

• Dutch Tulip Mania

• French Revolution

• The invention of the steam engine

• The Boston Tea Party