Inflation and Stagflation Answers
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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.2
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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.3
When government intervention makes currency worthless, this condition is called
A
deflation.B
hyperinflation.C
cost-push inflation.D
demand-pull inflation.4
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.5
The equation calculates an annual rate in economics.What rate does the equation calculate?
A
employment rateB
inflation rateC
demand rateD
supply rate6
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
What are the signs of high inflation? Check all that apply.
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.8
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 servicesDid you find these answers helpful?
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