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Inflation and Deflation Quiz

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Questions and Answers

What is inflation in economics?

An increase in the production of goods and services in an economy

A stable level of prices of goods and services in an economy

A decrease in the prices of goods and services in an economy

A general increase in the prices of goods and services in an economy (correct)

What corresponds to a reduction in the purchasing power of money?

GDP growth

Stable prices

Inflation (correct)

Deflation

How is inflation usually measured?

Using the consumer price index (CPI) (correct)

Using the unemployment rate

Using the gross domestic product (GDP)

Using the exchange rate

What is the common measure of inflation?

<p>Inflation rate, the annualized percentage change in a general price index</p> Signup and view all the answers

What is the opposite of CPI inflation?

<p>Deflation</p> Signup and view all the answers

Study Notes

Inflation in Economics

Inflation is a sustained increase in the general price level of goods and services in an economy over time.

Reduction in Purchasing Power

A reduction in the purchasing power of money corresponds to inflation, where the same amount of money can buy fewer goods and services than it could before.

Measuring Inflation

Inflation is usually measured as an annual percentage increase in the general price level.

Common Measure of Inflation

The Consumer Price Index (CPI) is the common measure of inflation, which tracks the average change in prices of a basket of goods and services consumed by households.

Opposite of CPI Inflation

Deflation, which is a sustained decrease in the general price level of goods and services in an economy over time, is the opposite of CPI inflation.

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Description

Test your knowledge of inflation and deflation with this quiz. Challenge yourself with questions about the causes, effects, and measurement of inflation, as well as the impact of deflation on the economy. Understand the concepts of purchasing power and the consumer price index (CPI) in this informative quiz.