68 Questions
What is the term for a decrease in the general level of prices?
Deflation
What is the formula to calculate the inflation rate?
Inflation rate = (given year's CPI-previous year's CPI)/previous year's CPI x 100
What is the difference between nominal income and real income?
Real income is adjusted for inflation, while nominal income is not
What is the type of inflation that results from an increase in the cost of production?
Cost-push inflation
What is the term for a reduction in the rate of inflation?
Disinflation
What is the formula to calculate real income?
Real income = nominal income/CPI
What is the type of home loan with an interest rate that can change due to changes in CPI rates?
Adjustable rate mortgage
What is the term for the actual interest rate without adjusting for inflation?
Nominal interest rate
What is the primary determinant of the price level according to the Classical View?
Aggregate demand
In which range of the aggregate supply curve does the economy experience full employment output?
Classical range
What is the primary driver of economic growth according to the Keynesian View?
Aggregate demand
What is the term for the simultaneous occurrence of high unemployment levels and rapid inflation?
Stagflation
What is the relationship between the price level and real GDP supplied in the Keynesian range of the aggregate supply curve?
No change
What is the sum of all individual demands for a particular good or service?
Market demand
In which segment of the aggregate supply curve is the economy experiencing a severe recession?
Keynesian range
What is the primary determinant of the quantity of goods and services produced in an economy?
Aggregate supply
What is the effect of a rise in the price level on the real value of financial assets with fixed nominal value?
It decreases the real value
Which of the following is a consequence of hyperinflation?
A wage-price spiral
What is the direction of the aggregate demand curve?
Downward sloping
What is the effect of a decrease in the price level on interest rates?
It decreases interest rates
What is the effect of a decrease in the price level on net exports?
It increases net exports
Which of the following is a consequence of speculation?
A shift in the production possibilities curve
What is the effect of hyperinflation on the credit market?
It leads to a credit market collapse
What is the effect of a wage-price spiral on the economy?
It leads to higher inflation
What is the term for a change in the quantity supplied due to a change in the price of a good?
Movement
What is the term for a market condition where the quantity supplied is less than the quantity demanded?
Shortage
What is the term for a price control system that sets a maximum price that can be legally charged for a good or service?
Price ceiling
What is the term for goods that are consumed jointly with each other?
Complementary goods
What is the term for a change in the demand curve caused by a change in a non-price determinant?
Shift
What is the term for a market condition where the quantity supplied is equal to the quantity demanded?
Equilibrium
What is the term for a price control system that sets a minimum price that can be legally charged for a good or service?
Price floor
What is the term for the horizontal sum of all individual quantities supplied by each seller in the market at each price?
Market supply
What is the term for the principle that states a direct relationship between the price and quantity supplied?
Law of supply
What is the term for two competing goods that a consumer can choose between?
Substitute goods
What is the primary consequence of a wage-price spiral on the economy?
Stagflation
What is the result of a rapid increase in the general price level on the real value of financial assets with fixed nominal value?
A decrease in the real value of financial assets
What is the consequence of a decrease in the price level on aggregate demand?
An increase in aggregate demand
What is the effect of hyperinflation on the credit market?
A decrease in borrowing and lending
What is the relationship between the price level and the quantity of real GDP demanded?
Inverse
What is the consequence of speculation on the economy?
A decrease in investment in technology and machines
What is the effect of a decrease in the price level on the interest rate?
A decrease in the interest rate
What is the consequence of hyperinflation on the economy?
Rapidly increasing prices and economic instability
What is the term that measures the cost of all goods and services to a typical consumer?
CPI
What is the formula to calculate the CPI?
current year cost/base year cost x 100
What is the difference between nominal interest rate and real interest rate?
Nominal interest rate is not adjusted for inflation, while real interest rate is
What is the term for a rise in the general price level resulting from an excess of total spending?
Demand Pull Inflation
What is the formula to calculate the inflation rate?
(given year's CPI-previous year's CPI)/previous year's CPI x 100
What is the term for a reduction in the rate of inflation?
Disinflation
What is the term for a type of home loan with an interest rate that can change due to changes in CPI rates?
Adjustable Rate Mortgage
What is the term for the value of the things you own?
Wealth
What is the primary characteristic of the Keynesian view of the aggregate supply curve?
Demand creates its own supply
What is the term for the total dollar amount of goods and services produced in an economy?
Real GDP
Which range of the aggregate supply curve represents the economy approaching full employment output?
Intermediate range
What is the consequence of both high unemployment levels and rapid inflation occurring simultaneously?
Stagflation
What is the term for the behavior of consumers in making choices about what goods and services to buy?
Choice-making behavior
What is the term for the sum of all individual demands for a particular good or service?
Market demand
What is the characteristic of the Classical view of the aggregate supply curve?
Supply creates its own demand
What is the term for the range of the aggregate supply curve where the economy is experiencing a severe recession?
Keynesian range
What is the term for a market condition where the quantity supplied is greater than the quantity demanded?
Surplus
What is the relationship between the price and quantity supplied according to the law of supply?
Direct
What is the term for a change in the quantity demanded due to a change in the price of a good?
Movement
What is the term for two competing goods for consumer purchase?
Substitute Goods
What is the term for a price control system that sets a maximum price that can be legally charged for a good or service?
Price Ceiling
What is the term for goods that are consumed jointly with each other?
Complementary Goods
What is the term for a change in the demand curve caused by a change in a non-price determinant?
Shift
What is the term for the curve showing the relation between the price of a good and the quantity producers are willing and able to sell?
Supply Curve
What is the term for a market condition where the quantity supplied is equal to the quantity demanded?
Equilibrium
What is the term for the horizontal sum of all individual quantities supplied by each seller in the market at each price?
Market Supply
Study for your ECON 300 final exam with these definitions of key economic concepts, including inflation, deflation, Consumer Price Index (CPI), and inflation rate. Learn how to calculate CPI and inflation rate with these formulas. Test your knowledge and prepare for your exam!
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