AnswersPersonal Financial and Money Management 21023710 BCPS 2026-27Inflation and Stagflation

Inflation and Stagflation Answers

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1
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When government intervention makes currency worthless, this condition is called

A
deflation.
B
hyperinflation.
C
cost-push inflation.
D
demand-pull inflation.
2
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Hyperinflation can occur when

A
consumers begin purchasing more goods.
B
producers need more money to make and distribute goods.
C
companies raise prices to pass on costs to consumers.
D
the government prints a ton of money in order to pay off its debt.
3

What are the signs of high inflation? Check all that apply.Production begins to fall.Production begins to rise.Interest rates decrease.Interest rates increase.Purchasing power falls.Fewer fixed rate bank loans.

A
Production begins to fall.
B
Production begins to rise.
C
Interest rates decrease.
D
Interest rates increase.
E
Purchasing power falls.
F
Fewer fixed rate bank loans.
4

Which is the best definition of inflation?

A
a gradual decrease in the price of goods and services
B
a gradual increase in the price of goods and services
C
an exponential decrease in the price of goods and services
D
an exponential increase in the price of goods and services
5

Demand-pull inflation happens when the demand for goods

A
remains very low.
B
shifts up and down.
C
matches the supply.
D
increases.
6

Which scenario is an example of demand-pull inflation?

A
Consumers have more money to buy cars, and the prices of cars and car accessories rise as a result.
B
An increase in workers’ wages raises the production cost of cars, and car prices rise as a result.
C
The demand for cars falls as consumers have less disposable income, and car prices fall as a result.
D
A government bailout helps car manufacturers lower their costs, and car prices fall as a result.
7

Why is gasoline weighted more heavily than tomatoes in a calculation of the annual inflation rate in the United States?

A
Gasoline costs more to produce and purchase than tomatoes.
B
Gasoline is imported from other nations at a higher rate than tomatoes.
C
Americans purchase many more boxes of tomatoes than barrels of gasoline.
D
Americans spend more money on gasoline than tomatoes, on average.
8

Typically, low inflation is a sign of

A
a healthy economy because it results from a steady rise in demand.
B
a healthy economy because it results from a steady rise in supply.
C
a struggling economy because it results from a steady fall in demand.
D
a struggling economy because it results from a steady fall in supply.
9

losegain

A
lose
B
gain
10

Which federal agency calculates the Consumer Price Index (CPI)?

A
US Census Bureau
B
US Bureau of Labor Statistics
C
US Department of Commerce
D
US Department of the Treasury

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