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Questions and Answers
What is inflation?
What is inflation?
- An increase in the value of money
- An increase in the general price level of goods and services in the economy (correct)
- A decrease in the average prices of consumer goods and services
- An increase in the price of a specific product
What is the purpose of the consumer price index (CPI)?
What is the purpose of the consumer price index (CPI)?
- To calculate the GDP of a country
- To determine the unemployment rate
- To measure changes in the price of specific luxury goods
- To measure changes in the average prices of consumer goods and services (correct)
What is the inflation target in Australia?
What is the inflation target in Australia?
- To achieve an inflation rate of 2–3 per cent, on average, over time (correct)
- To maintain zero inflation at all times
- To achieve an inflation rate of 5–7 per cent
- To allow inflation to fluctuate freely without a target
How is the CPI computed?
How is the CPI computed?
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What are the consequences of inflation?
What are the consequences of inflation?
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