Problem Of Inflation

Question 1

A dollar cannot buy as much today as it did in the past is an example of what?

Answer 1

Inflation

Question 2

Inflation is measured by calculating the increase in prices of a bundle of goods called a _________ _________.

Answer 2

Market Basket

Question 3

A market basket includes the typical goods __________ by a specific group of purchasers over a period of time.

Answer 3

Purchased

Question 4

A price index measured the changes in prices of the _________ _________ from one year to the next.

Answer 4

Market basket

Question 5

The greater the percent change in the price index, the higher the rate of _________.

Answer 5

Inflation

Question 6

The primary function of money is to serve as a what?

Answer 6

Medium of exchange

Question 7

During the revolution in the late _______ the US dollar was first introduced.

Answer 7

1700’s

Question 8

The soldiers fighting in the revolution preferred to be paid in _______ rather than dollars.

Answer 8

Pounds

Question 9

The National Banking Act was passed in ______ and required all transactions to be in US dollars.

Answer 9

1863

Question 10

A second important function of money is that it is a “______ of ______” meaning a dollar must retain its value over time.

Answer 10

Store of Value

Question 11

Who is especially vulnerable of loss of purchasing power through inflation on a fixed income?

Answer 11

Retired persons

Question 12

Banks increase interest rates to be sure to make a profit on ________.

Answer 12

Loans

Question 13

What type of inflation is the type of inflation where the prices of goods and services rise because the buyers are demanding more and more of the product, even thought the increase in supply can’t keep up?

Answer 13

Demand pull inflation

Question 14

When do we usually see signs of demand pull inflation?

Answer 14

When the economy is approaching full employment

Question 15

Cost push inflation occurs when the cost of a basic resource use to make a _________ goes up.

Answer 15

Product

Question 16

Cost push inflation may be caused by an increase in raw _________ price.

Answer 16

Material

Question 17

The increase in the cost of _____ will push up the cost of virtually every product in the US.

Answer 17

Oil

Question 18

Cost push inflation also occurs when the cost of ________ goes higher.

Answer 18

Labor

Question 19

Producers who face less competition can pass on increases resource cost faster than producers who face _______ competition.

Answer 19

More

Question 20

Fiscal policy is the tax and spending policy initiated by the federal _____________.

Answer 20

Government

Question 21

The Federal Reserve can “_________ ________” by reducing the amount of money in the economy.

Answer 21

Tighten credit

Question 22

Supply shock is the cut off of supply and isn’t ____________.

Answer 22

Anticipated

Question 23

Demand shock is when demand for goods and services _______ in the face of a natural disaster for example.

Answer 23

Spikes

Question 24

The loss of purchasing power of money is considered?

Answer 24

Inflation

Question 25

As more and more people want a limited number of products, prices are bid up for those products is considered what?

Answer 25

Demand pull inflation

Question 26

What happens as increases in resource costs are passed on to buyers through higher prices?

Answer 26

Costs push inflation

Question 27

An unanticipated event that triggers an increase in prices is considered what?

Answer 27

Supply and Demand shocks

Question 28

To solve demand pull inflation through fiscal policy governments ______ billions of government projects or they ___________ income taxes.

Answer 28

Cut Increase

Question 29

During inflation the monetary policy controlled by the Federal Reserve System will __________ the amount of money in an economy creating less ________ for people to buy products.

Answer 29

Reduce Loans

Question 30

During a supply shock the economy can return to normal because of the reaction in a _______ market.

Answer 30

Free

Question 31

During a demand shock, the economy returns to normal on its _______.

Answer 31

Own

Question 32

The National Banking Act of 1863 got all of the ________ currencies out of circulation.

Answer 32

State

Question 33

During inflation, federal government during fiscal policy sees the economy as having too much what?

Answer 33

Demand

Question 34

During inflation, the Federal Reserve during monetary policy sees the economy as having too much what?

Answer 34

Money