inflation

Question 1

what is inflation

Answer 1

general increase in prices of goods and services over time (can be a decrease, ex. -1.2% inflation rate vs 2%)

Question 2

how does inflation affect purchasing power

Answer 2

reduces purchasing power especially for low and fixed incomes

Question 3

what is a mild (government tolerates) inflation rate vs severe

Answer 3

mild: 4%
severe: 10%

Question 4

what was the highest inflation rate in QC and what is it now (bonus)

Answer 4

highest: 8.1%
now: 2.5%

Question 5

how is inflation calculated

Answer 5

calculated using consumer price index (CPI)

Question 6

what does the CPI do

Answer 6

follows changes in prices of a basket of goods and services. (600 commonly used items, adjusted every so often)

Question 7

what are 3 things causing inflation

Answer 7

• more demand & not enough supply
• more credit=more spending
• tax increase

Question 8

what are the 3 most important CPI components

Answer 8

• housing
• transport
• food and beverages

Question 9

what are 3 things consumers can do to minimize the effects of inflation

Answer 9

• focus only on necessities (stop over-buying)
• buy things that are cheaper (off-brand)
• grow own vegetables