Unit 8

A business reporter claims that we are suffering from inertial Inflation. This means...

The current rate of inflation will remain at this level until extended shocks cause it to change

A frequently-used metric by analysis is the yield, or credit spread. Common methods of computing this would be comparing

Bonds of similar quality and different maturities. Bond of different quality and similar maturities.

What is the definition of inflation?

A decrease in the value of the monetary unit.

During an economic recession, which of the following items will most likely increase?

Bond prices. During a recessionary period, inflation and interest rates generally decline.

An inverted yield curve results in part bu

Investors buying long-term bonds are selling short-term bonds

What does CPI measure?

Measures retail prices whether or not wholesale prices are passed through the consumer

When is CPI computed?

Monthly

Core inflation is best described as an inflation rate ...

That excludes certain volatile goods prices. (Excludes food and energy prices.

A significant increase in importing of goods into the IS would likely have what effect on the strength of the US dollar?

Weaken. A sign increase imports represents a large outflow of US dollars which resultes in a negative trade balance.

To reflect a more accurate picture of economic results, gross domestic product is adjusted

For inflation

If a country's current account shows a trade deficit, it is most likely that

Import are greater than exports