24 Questions
What is the term for a decrease in the general level of prices?
Deflation
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 difference between nominal income and real income?
Real income is adjusted for inflation, while nominal income is not
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 CPI?
Current year cost/base year cost x 100
What is the term for a reduction in the rate of inflation?
Disinflation
What is the definition of aggregate supply?
The total dollar amount of goods and services produced in an economy
Which view of the aggregate supply curve states that 'demand creates its own supply'?
Keynesian View
What is the name of the range in the aggregate supply curve that represents a severe recession?
Keynesian Range
What occurs when the economy experiences both high unemployment levels and rapid inflation?
Stagflation
What is the definition of market demand?
The sum of all the individual demands for a particular good or service
What is the shape of the aggregate supply curve according to the Classical View?
Vertical
What is the term for a change in the quantity supplied in response to a change in the price of a good?
Movement
What is the result of a price ceiling?
Discrimination
What is the term for two goods that are consumed jointly with each other?
Complementary goods
What is the term for a change in the supply curve caused by a factor other than price?
Shift
What is the market condition where the quantity supplied is equal to the quantity demanded?
Equilibrium
What is the term for a minimum price that can be legally charged for a good or service?
Price floor
What is a consequence of hyperinflation on the credit market?
A collapse occurs when borrowers cannot pay back their dues
What is the effect of a wage-price spiral on the economy?
It causes higher prices and higher nominal wages
What is the effect of speculation on the economy?
It results in people investing in assets to gain wealth
What is the effect of a decrease in the price level on real balances?
It increases the real value of financial assets
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
Test your understanding of key economic concepts, including inflation, deflation, Consumer Price Index, and inflation rate. Study for your ECON 300 final exam with this definitions quiz.
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