Ch 3-1 Personal Finance

Higher prices as a result of consumers wanting to buy more goods and services than producers supply

Demand pull inflation

A cost-of-living raise (COLA) will give the consumer more purchasing power.

False

Hyperinflation has not occurred in the United States except for rapidly increasing food prices.

False

Inflation increases your purchasing power.

False

Increase in the general level of prices.

Inflation

Rising prices due to scarce resources or increased difficulty in obtaining resources

Real cost inflation

A concept that says a dollar you receive in the future will be worth less than a dollar you receive today

Time-value of money

The economy changes with the habits and attitudes of producers and consumers.

True

The monetary policy refers to the actions taken by the Federal Reserve System (Fed) to help stabilize the economy

True

Rising prices as a result of rising production costs

cost-push inflation

Decrease to the general level of prices

deflation

Which form of inflation is created by consumers spending money too fast?

demand-pull

Rising prices with the rate of increase slowing down

disinflation

Which of the following does inflation affect?

employment saving investins all of the above

Double-digit inflation is known as

hyperinflation

Rapidly rising prices that are out of control

hyperinflation

A measure of the efficiency with which goods and services are made (comparison of total output to total inputs.)

productivity

Which of the following occurs when high prices are lowered due to decreased demand, but then are restored to the previous high level.

refalation

High prices followed by lower prices and then higher prices again

reflation