Inflation

Question 1

A sustained increase in the general price level of goods and services in an economy over a period of time is what?

Answer 1

Inflation

Question 2

What is the term when prices drop?

Answer 2

Deflation

Question 3

When inflation continues but the rate of inflation gets smaller and smaller it’s considered what?

Answer 3

Disinflation

Question 4

Inflation and hyperinflation are caused by an excessive growth of __________ supply.

Answer 4

Money

Question 5

Who has the highest inflation with an annual inflation of 536.2%?

Answer 5

Venezuela

Question 6

What is the target level of inflation in the US?

Answer 6

2.0%

Question 7

Who introduced the practice of printing paper money to create fiat currency?

Answer 7

Song Dynasty China

Question 8

What currency is a currency which has no inherent value in that it is not made from gold?

Answer 8

Fiat currency

Question 9

Historically, large infusions of ______ or ________ into an economy also lead to inflation.

Answer 9

Gold

Silver

Question 10

________ ________ and ________ ________ examined and debated currency devaluation on the price of goods.

Answer 10

David Hume

David Ricardo

Question 11

Who is responsible for tracking and calculating inflation in the US?

Answer 11

The Bureau of Labor Statistics

Question 12

The inflation rate is calculated by calculating movement or change in what index?

Answer 12

Consumer price index

Question 13

What measures average changes in prices received by domestic producers for their output?

Answer 13

Producer price indices

Question 14

A measure of core inflation which removes the most volatile components from a broad price index is what?

Answer 14

Core price indices

Question 15

When measuring inflation from year to year economists will chose a base year and give it a value of ______ and compare inflation based on the base effect.

Answer 15

100

Question 16

Inflation is also seasonally ____________ to adjust for growing demand during different seasons. (ie. More gas for heating during winter)

Answer 16

Adjusted

Question 17

Low inflation reduces the severity of economic ____________ by enabling the labor market to adjust more quickly in a downturn.

Answer 17

Recessions

Question 18

The adoption of fiat currency made much larger variations in the __________ of money possible.

Answer 18

Supply

Question 19

To measure overall inflation the price change of a large “___________” of representative goods and services is measured.

Answer 19

Basket

Question 20

The adoption of fiat currency made much larger variations in the supply of what possible?

Answer 20

Money

Question 21

Central banks rely on what price indices when measuring inflationary impact of monetary policy?

Answer 21

Core price indices

Question 22

An increase in the producer price indices would indicate an eventual increase in what indices?

Answer 22

Consumer price indices

Question 23

When the value of the currency is lowered in contrast with its actual reserve its called a what?

Answer 23

Invisible tax

Question 24

When measuring the CPI we only measure for _________ consumers, not rural.

Answer 24

Urban

Question 25

When you take 72 and divide it by the inflation rate and get the amount in years the price will double, you used what rule?

Answer 25

Rule of 72

Question 26

What percent of inflation is considered a manageable rate of inflation?

Answer 26

3%

Question 27

If you fight unemployment, inflation gets worse. But if you fight inflation, unemployment gets worse during what?

Answer 27

Stagflation

Question 28

The printing of money is closely regulated by whom?

Answer 28

The Federal Reserve

Question 29

From the second half of the 15th century to the first half of the 17th, Western Europe experienced a major inflationary period known as what?

Answer 29

Price revolution

Question 30

When unemployment is greater than ____% we have an unemployment problem.

Answer 30

4%

Question 31

When inflation is greater than _____% we have an inflation problem.

Answer 31

2.9%

Question 32

When you have a positive GDP gap the problem is what? What about when you have a negative GDP gap?

Answer 32

Inflation Unemployment

Question 33

What are the two types of cost push inflation?

Answer 33

Supply and demand shocks

Question 34

Operating over the potential GDP creates what inflation?

Answer 34

Demand pull inflation

Question 35

Operating below GDP potential is considered what problem?

Answer 35

Unemployment