Inflation and Stagflation Answers
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The graph shows changes in the US economy between 1971 and 2001.According to the graph, 1971 to 1976 was a period of stagflation due to
A
rising unemployment and inflation.B
falling unemployment and inflation.C
rising unemployment and falling inflation.D
falling unemployment and rising inflation.3
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.4
The inflationary spiral explains the causes and effects of high inflation. The spiral usually begins with an increase in demand. What is the direct effect of this increase?
A
Producers raise prices to continue to make a profit.B
The government prints more money, lowering the value of money.C
Workers negotiate with employers to receive more money.D
Consumers need higher wages to keep up with rising prices.5
How does demand-pull inflation differ from cost-push inflation?
A
Demand-pull inflation is driven by consumers, while cost-push inflation is driven by producers.B
Demand-pull inflation is driven by producers, while cost-push inflation is driven by consumers.C
Demand-pull inflation is driven by the private sector, while cost-push inflation is driven by the government.D
Demand-pull inflation is driven by the government, while cost-push inflation is driven by the private sector.6
When government intervention makes currency worthless, this condition is called
A
deflation.B
hyperinflation.C
cost-push inflation.D
demand-pull inflation.7
What is one consequence of stagflation?
A
The economy drastically slows down as money loses its buying power.B
Producers cannot keep up with consumer interest and raise their prices.C
There are not enough workers to meet the rising level of production.D
Demand is too high and people spend more money than they should.8
Stagflation occurs when high inflation combines with
A
high unemployment and a low level of production.B
low unemployment and a high level of production.C
a drop in buying power and a rise in workers’ wages.D
a rise in buying power and a drop in workers’ wages.Did you find these answers helpful?
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