6.05 Inflation

Inflation is used as a measure of economic performance because it can do what?

Show economists if the prices of goods have changed over time or if the economy has expanded.

What might the government or the central bank do to counteract the effects of inflation?

All of the above. (Increase taxes, Decrease spending, Decrease the amount of money in circulation.)

The Consumer Price Index is used to calculate what?

How prices have changed over the years

Which of the following statements best explains the term inflation?

Inflation is the increase of prices over time.

Which of the following is NOT one of the theories of the causes of inflation?

Quality Theory