inflation

(T/F) Hyperinflation means it is easier for people to make purchases because they are able to carry around a larger amount of money.

False

(T/F) Cost-push inflation leads to a leftward shift of the aggregate supply curve.

True

(T/F) The aggregate demand curve assumes all things are constant, including other countries' price levels and exchange rates.

True

Which of the following terms is also known as total output? a. Aggregate supply b. Price level c. Price index d. Aggregate demand

a. Aggregate supply

The __________ considers the weighted averages of a group of consumer goods and services. a. Consumer price index b. Producer price index c. Aggregate supply d. Aggregate demand

a. Consumer price index

Which of the followings is NOT one of the forms of inflation? a. Pre-inflation b. Hyperinflation c. Stagflation d. Disinflation

a. Pre-inflation

Which of the following is NOT one of the components of Gross Domestic Product (GDP)? a. Producer Price Index b. Investment c. Consumption d. Government spending

a. Producer Price Index

Which of the following types of inflation involves the government using financial stimuli to increase the country's output? a. Disinflation b. Reflation c. Deflation d. Hyperinflation

b. Reflation

Which of the following explains the relations between the average price of aggregate supply and the quantity demanded? a. Consumer price index b. Price level c. Aggregate demand d. Producer price index

c. Aggregate demand

Which of the following causes of inflation is often described as "too much money chasing too few goods"? a. Cost-push inflation b. Demand-push inflation c. Demand-pull inflation d. Cost-pull inflation

c. Demand-pull inflation

Which of the following types of inflation occurs when sales drop and retailers cannot place higher prices on customers? a. Deflation b. Pre-inflation c. Disinflation d. Hyperinflation

c. Disinflation

Which of the following is NOT an effect of inflation? a. Lowers the standard of living for those on fixed incomes b. Lowers domestic competition if higher than in other countries c. Lowers employment rates among unskilled workers d. Lowers purchasing power

c. Lowers employment rates among unskilled workers

Which of the following interest rates is expressed in terms of current dollars as the percentage of the amount loaned? a. Compound interest rate b. Real interest rate c. Nominal interest rate d. Simple interest rate

c. Nominal interest rate

Which of the following is NOT one of the constants the aggregate supply curve assumes? a. State of technology b. Rules providing production incentives c. Rate of production d. Resource prices

c. Rate of production

Most countries try to maintain an inflation rate of __________ per year. a. Four to five percent b. Six to seven percent c. Two to three percent d. One percent or less

c. Two to three percent

__________ refers to a decrease in price level. a. Hyperinflation b. Disinflation c. Stagflation d. Deflation

d. Deflation

__________ is a decrease in the rate of inflation. a. Hyperinflation Inflation b. Deflation c. Stagflation d. Disinflation

d. Disinflation

Which of the statements is INCORRECT about inflation? a. Inflation results in a reduction in the value of money. b. Inflation if the result of an increase in aggregate supply or demand c. Most countries try to maintain an inflation rate of two to three percent per year. d. Inflation is usually measured monthly.

d. Inflation is usually measured monthly.

__________ occurs in the economy when unemployment and inflation are both high. a. Disinflation b. Hyperinflation c. Deflation d. Stagflation

d. Stagflation

Which of the following types of inflation interferes with a company's ability to plan for the future? a. Expected inflation b. Galloping inflation c. Creeping inflation d. Unexpected inflation

d. Unexpected inflation