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.2
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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.3
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.4
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.5
Which is an effect of stagflation?
A
Trade with other economies increases.B
The value of a country’s currency drops.C
Prices for goods fall sharply and suddenly.D
The GDP rises along with production levels.6
Which is the best definition of inflation?
A
a gradual decrease in the price of goods and servicesB
a gradual increase in the price of goods and servicesC
an exponential decrease in the price of goods and servicesD
an exponential increase in the price of goods and services7
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.8
Typically, high inflation is a sign of
A
a healthy economy because it results from a fall in production costs.B
a healthy economy because it results from a rise in consumer interest.C
a struggling economy because wages cannot keep up with the increase in prices.D
a struggling economy because it results from a fall in consumer interest.10
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.Did you find these answers helpful?
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