5 Questions
How is inflation usually measured?
Using the consumer price index (CPI)
What is inflation?
A general increase in the prices of goods and services in an economy
What corresponds to a reduction in the purchasing power of money?
Inflation
What is the opposite of CPI inflation?
Deflation, a decrease in the general price level of goods and services
What is the common measure of inflation?
The inflation rate, the annualized percentage change in a general price index
Study Notes
Inflation Measurement and Concept
- Inflation is a sustained increase in the general price level of goods and services in an economy over a period of time.
- Inflation corresponds to a reduction in the purchasing power of money.
- 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.
- The opposite of CPI inflation is deflation, which is a decrease in the general price level of goods and services over time.
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.
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