Test Your Knowledge!

The inflation index that measures price changes of consumer goods and services is called the _____. The inflation index that measures prices changes of producer goods and services is called the _____. A measure of price changes of final goods and services using nominal and real GDP data is called the _____.

Section 1 of this unit mentions several problems with inflation measures. Which of the following is not a problem mentioned in our text?

According to our text, what is the only long term cause of rising prices?

When a government prints excessive amounts of additional money and the circulation of money (velocity) accelerates to unusual levels, the country experiences:

Section 3 lists six harmful effects of inflation. All of the following are listed and described, except:

According to our text, if a government keeps its money supply constant, and productivity and production increase, then:

According to our text, a big misconception exists about falling prices and their effects on economic growth and employment. Many economists and politicians believe that falling prices are harmful because:

According to our text, in an economy with consistently falling prices, banks must make sure that when they issue mortgage loans (loans to finance houses), they:

According to our text, all of the following are correct, except:

Countries that were on the Gold Standard required their central banks to increase the nation’s money supply by only as much as the country’s supply of gold. Because the supply of gold typically increases only by 1 or 2%, it forced central banks to limit their money supply increases by only 1 or 2%. A limited increase in the money supply creates more price stability. In the late 1960s/early 1970s most countries banned the Gold Standard because: