ECON 300 Final: Inflation and Deflation Definitions

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What is the term for a decrease in the general level of prices?

Inflation
Stagflation
Disinflation
Deflation (correct)

What is the formula to calculate the inflation rate?

Real income/CPI
(Given year's CPI-previous year's CPI)/previous year's CPI x 100 (correct)
Given year's CPI/previous year's CPI x 100
Nominal income/CPI

What is the difference between nominal income and real income?

Real income is the total amount of money earned, while nominal income is the amount of money spent
Nominal income is the total amount of money earned, while real income is the amount of money spent
Real income is adjusted for inflation, while nominal income is not (correct)
Nominal income is adjusted for inflation, while real 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 (C) Signup and view all the answers

What is the formula to calculate the CPI?

Current year cost/base year cost x 100 (B) Signup and view all the answers

What is the term for a reduction in the rate of inflation?

Disinflation (B) Signup and view all the answers

What is the definition of aggregate supply?

The total dollar amount of goods and services produced in an economy (A) Signup and view all the answers

Which view of the aggregate supply curve states that 'demand creates its own supply'?

Keynesian View (B) Signup and view all the answers

What is the name of the range in the aggregate supply curve that represents a severe recession?

Keynesian Range (B) Signup and view all the answers

What occurs when the economy experiences both high unemployment levels and rapid inflation?

Stagflation (B) Signup and view all the answers

What is the definition of market demand?

The sum of all the individual demands for a particular good or service (A) Signup and view all the answers

What is the shape of the aggregate supply curve according to the Classical View?

Vertical (D) Signup and view all the answers

What is the term for a change in the quantity supplied in response to a change in the price of a good?

Movement (C) Signup and view all the answers

What is the result of a price ceiling?

Discrimination (A) Signup and view all the answers

What is the term for two goods that are consumed jointly with each other?

Complementary goods (A) Signup and view all the answers

What is the term for a change in the supply curve caused by a factor other than price?

Shift (D) Signup and view all the answers

What is the market condition where the quantity supplied is equal to the quantity demanded?

Equilibrium (C) Signup and view all the answers

What is the term for a minimum price that can be legally charged for a good or service?

Price floor (A) Signup and view all the answers

What is a consequence of hyperinflation on the credit market?

A collapse occurs when borrowers cannot pay back their dues (D) Signup and view all the answers

What is the effect of a wage-price spiral on the economy?

It causes higher prices and higher nominal wages (C) Signup and view all the answers

What is the effect of speculation on the economy?

It results in people investing in assets to gain wealth (D) Signup and view all the answers

What is the effect of a decrease in the price level on real balances?

It increases the real value of financial assets (C) Signup and view all the answers

What is the effect of a decrease in the price level on interest rates?

It decreases interest rates (C) Signup and view all the answers

What is the effect of a decrease in the price level on net exports?

It increases net exports (D) Signup and view all the answers