Inflation

Question 1

Parts of buisness cycle

Answer 1

Expansion, peak, contraction, trough

Question 2

expansion

Answer 2

• GDP grows, unempolyment declines

Question 3

Peak

Answer 3

Real GDP spending is at its highest

Question 4

Contraction

Answer 4

GDP grouth stows decines

Question 5

Trough

Answer 5

between contraction and expansion, GDP recovers

Question 6

a general increase in prices or as a decrease in money’s purchasing power

Question 7

True or flase
Inflation can be good

Answer 7

a little price increase is good, a big and fast increase is bad

Question 8

Cause of inflation?

Answer 8

• either created by excessive demand or increase in producer’s per unit cost

Question 9

Fault of buyers, result of a lot of money in the hands of people

Answer 9

• Demand-pull
→

Question 10

Causes of demand pull

Answer 10

agregate demand › aggregate supply
- protigate government spending (exersive use of goverment funds)
- investments are high
- lowering of taxes

Question 11

fault of sellers

Answer 11

Cost puh

Question 12

Cause of cost push

Answer 12

increase in price of input: producers face a higher operating costs

Question 13

Effect on producer

Answer 13

when unexpected inflation, prices increase while wages stay thesane

Question 14

Effect on lenders and savers

Answer 14

i savers
- the money they loaned will be returned not wortin as much
- inflation erodes purchasing pouer of savings t other forms of wealth

Question 15

Eff3ct on
- as a consumor with fixed income

Answer 15

• during unexpected inflation, fixed income’s see their real income deline

Question 16

Effect on employees

Answer 16

• some may lose their jobs

Question 17

• a fixed set of consumer products and services

Answer 17

Representative basket of goods

Question 18

Price index

Answer 18

to knou how much it will cost to maintain a standard wing life
• represents overall price of goods i services

Question 19

measures the cost of a representative basket of goods and service bought by a typical firm

Answer 19

PRODUCER PRICE INDEX

Question 20

measures the cost of a representative basket of goods and service bought by a typical consumer

Answer 20

CONSUMER PRICE INDEX

Question 21

Headline inflation

Answer 21

intation figure nesulted from using consumer price index
→ things we usually buy

Question 22

able to work, discouraged about the prospects of finding employment

Answer 22

Hidden

Question 23

economy is set up to their disadiantage
→ teacher, no school in town

Answer 23

Structural

Question 24

out of work because of buisness cycle

Answer 24

Cyclical

Question 25

finds work for only a portion of the year due to seasonal nature ofjoos
→

Answer 25

Sesonal

Question 26

in between jous, quits
o job starts n mochat ton i for another

Answer 26

Frictional

Question 27

includes employed and unemployed

Answer 27

LABOR FORCE (LF)

Question 28

includes employed, unemployed, and out of labor force

Answer 28

ECONOMICALLY ACTIVE POPULATION (EP)

Question 29

working at a paid job but is willing to work for more hours

Answer 29

UNDEREMPLOYED (UN)

Question 30

working a paid job for at least some minimum amount of time

Answer 30

EMPLOYED (N)

Question 31

no job and looking for a job, waiting to start a new job, or on temporary layoff

Answer 31

UNEMPLOYED (U)