Quiz05

Question 1

To be considered inflation, all prices must rise, however briefly.

Answer 1

False

Question 2

If the market basket cost $2,000 in the base year, and today cost $5,000, the CPI would be:

Answer 2

Today/ Base year x 100

250

Question 3

Economists think that inflation is a major economic problem because it creates:

Answer 3

uncertainty

Question 4

The circular flow represents things that are included in:

Answer 4

aggregate demand

Question 5

An increase in aggregate demand would _______ prices and _____ real GDP.

Answer 5

increase, increase

Question 6

An increase in taxes on businesses would:

Answer 6

decrease aggregate supply

Question 7

Pre-Classical economists were mostly ________

Answer 7

mercantilists

Question 8

Adam Smith and followers were part of something called the:

Answer 8

Age of Enlightenment

Question 9

Adam Smith’s book is about the economy:

Answer 9

over the long term, even decades

Question 10

If yesterday I made $15 per hour and today I am making $20, and a loaf of bread cost $3 and $4 today, my real wage has fallen and my nominal wage has risen.

Answer 10

True