Inflation

Question 1

Deflation

Answer 1

Prices fall; it may sound good but can lead to economic problems like job losses.

Question 2

Hyperinflation

Answer 2

Prices rises extremely fast; money looses almost all of its value.

Question 3

Ways to prevent inflation

Answer 3

Limit the amount of money printed and encourage productivity; higher productivity help keeps prices stable,

Question 4

Causes of inflation 1

Answer 4

Demand-pull inflation. This happens when there a product is high in demand but low in supply and businesses will raise the prices as consumers are willing to pay more to purchase this product.

Question 5

Causes of inflation 2

Answer 5

Cost-push inflation. This occurs when the cost of production increases so producers have to increase the price of the product so they can get profit.

Question 6

Cause of inflation 3

Answer 6

Government policies and money supply. Inflation can happen when the government prints too much money, they have to increase the prices because money looses value.