Pretest

Question 1

Which scenario is an example of demand-pull inflation?

Revolt · Accepted Answer

Consumers have more money to buy cars, and the prices of cars and car accessories rise as a result.

Question 2

Typically, low inflation is a sign of

Revolt · Accepted Answer

a healthy economy because it results from a steady rise in demand.

Question 3

Which scenario is an example of cost-push inflation?

Revolt · Accepted Answer

An increase in workers’ wages raises the production cost of cars, and car prices rise as a result.

Question 4

Cost-push inflation occurs when

Revolt · Accepted Answer

producers need more money to make and distribute goods.

Question 5

Typically, high inflation is a sign of

Revolt · Accepted Answer

a healthy economy because it results from a rise in consumer interest.

Question 6

Hyperinflation can occur when

Revolt · Accepted Answer

the government prints a ton of money in order to pay off its debt.

Question 7

When government intervention makes currency worthless, this condition is called

Revolt · Accepted Answer

hyperinflation.

Question 8

Demand-pull inflation happens when the demand for goods

Revolt · Accepted Answer

increases.

Question 9

Consumers having more money to purchase computers will most likely result in

Revolt · Accepted Answer

an increase in prices for computers and computer accessories.

Question 10

How does demand-pull inflation differ from cost-push inflation?

Revolt · Accepted Answer

Demand-pull inflation is driven by consumers, while cost-push inflation is driven by producers.

Pretest Answers