Inflation

Question 1

a situation in which the economy’s overall price level is rising

Answer 1

Inflation

Question 2

percentage change in the price level

Answer 2

inflation rate

Question 3

the measure of the overall cost of goods and services bought by a consumer

Answer 3

consumer price index

Question 4

Consumer Price Index (formula)

Answer 4

CPI = (Price of the basket of goods and services / Price of the basket in the base year) x 100

Question 5

Inflation rate (formula)

Answer 5

Inflation rate in year 2 = [(CPI in year 2 - CPI in year 1) / CPI in year 1] x 100

Question 6

The year-on-year change in the CPI

Answer 6

Inflation

Question 7

the total final output produced with inputs owned by the residents of a country during a year

Answer 7

Gross Domestic Product

Question 8

GDP at current market prices

Answer 8

Nominal GDP

Question 9

the calculated value of volume or quantity of production

after removing the influence of changes in price or inflation

Answer 9

Real GDP

Question 10

ratio of Nominal GDP to Real GDP

Answer 10

GDP Deflator

Question 11

GDP Deflator (formula)

Answer 11

(Nominal GDP / Real GDP) x 100

Question 12

Nominal GDP (formula)

Answer 12

[(real GDP)(GDP Deflator)] / 100

Question 13

Formula for calculating inflation rate using GDP Deflator

Answer 13

IR = [(GDP Def 2 - GDP Def 1) / GDP Def 1] x 100

Question 14

Prices rise slowly and predictably.

Money retains its value from month to month and year to year.

Answer 14

Low Inflation

Question 15

Double-digit or triple-digit range of 20, 100, or 200 percent per year.

Answer 15

Galloping Inflation

Question 16

Prices are rising a million or even a trillion percent per year.

When governments print money

Answer 16

Hyperinflation

Question 17

Simultaneously experiencing stagnant activity and accelerating inflation.

Recession-inflation

Answer 17

Stagflation

Question 18

Occurs when aggregate demand rises more rapidly than the economy’s productive potential, pulling prices up

Answer 18

Demand-pull inflation

Question 19

Inflation wherein it increases because of increases in costs rather than because of
increases in demands

Answer 19

Cost-push inflation

Question 20

Also known as supply-shock inflation

Answer 20

Cost-push inflation

Question 21

often leads to stagflation

Answer 21

Cost-push inflation

Question 22

Macroeconomic tool used to understand inflation

Answer 22

The Phillips Curve

Question 23

shows the tradeoff between inflation and unemployment

Answer 23

The Phillips Curve

Question 24

At full employment (when labor demands are supplied)

Answer 24

Non-accelerating inflation rate of unemployment

Question 25

specific level of unemployment where the inflation is constant.

Answer 25

Non-accelerating inflation rate of unemployment

Question 26

equilibrium between the economy and labor market

Answer 26

Non-accelerating inflation rate of unemployment