Interactions in the US Economy Answers
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Review the graph.
A
inflationB
deflationC
the circular flow of incomeD
the consumer price index2
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What is one cause of hyperinflation?
A
The government overprints money to boost the economy.B
The demand for a product grows in response to a limited supply.C
Prices fall across an economy due to a drop in consumer interest.D
The supply of a product unexpectedly increases with a rise in production.3
Which statement best explains the role of workers in the circular flow of income?
A
Workers are a factor of production, and they produce goods or services.B
Workers represent the households that use goods and services.C
Workers represent businesses and pay dividends to stockholders.D
Workers are consumers who buy products made by firms.4
Which scenario is an example of cost-push inflation?
A
The cost of purses rises after a store does not stock a large enough supply.B
The cost of gasoline rises at least once a year to match the cost of living.C
The cost of sneakers rises after a celebrity recommends them and demand goes up.D
The cost of cell phones rises after manufacturing them becomes more expensive.5
The bottom line on the graph shows the change in American workers’ average hourly wages from 1964 to 2018. The top line on the graph shows average wages in today’s dollars after being adjusted for inflation.
A
Although wages have risen, purchasing power has stayed the same.B
Both wages and purchasing power have steadily increased over time.C
Although wages have fallen, purchasing power has stayed the same.D
Both wages and purchasing power have steadily decreased over time.6
Review the graph.
A
They will pay much less for tickets.B
They will pay much more for tickets.C
They will pay slightly less for tickets.D
They will pay slightly more for tickets.7
What is deflation?
A
the wage an average worker makesB
the wage an average business paysC
a general increase in prices in an economyD
a general decrease in prices in an economy8
Review the graph.
A
recessionB
circular flow of incomeC
cost-of-living adjustmentD
depression9
What is one famous example of deflation?
A
the loss of the value of Zimbabwe’s dollarB
the Great Depression in the US in the 1930sC
the printing of German marks to pay war debtsD
the steep rise in gas prices in the US in the 1970s10
What is the next step in the circular flow of income after firms produce goods and services?
A
Firms provide labor.B
Households purchase labor.C
The goods go back to the firms.D
Households consume goods and services.Did you find these answers helpful?
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