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Questions and Answers
What is inflation?
What is inflation?
- A general increase in prices and fall in the purchasing value of money (correct)
- A decrease in prices and rise in the purchasing value of money
- A situation where prices remain stable over time
- An increase in the production of goods and services
What is one of the impacts of high inflation?
What is one of the impacts of high inflation?
- No impact on purchasing power
- Reduced purchasing power (correct)
- Stable purchasing power
- Increased purchasing power
What does deflation refer to?
What does deflation refer to?
- A general decrease in prices and increase in the purchasing value of money (correct)
- An increase in the production of goods and services
- A situation where prices remain stable over time
- An increase in prices and fall in the purchasing value of money
Study Notes
Inflation and Deflation
- Inflation is a sustained increase in the general price level of goods and services in an economy over a period of time.
- High inflation can lead to a decrease in the purchasing power of consumers, as the same amount of money can buy fewer goods and services.
- Deflation refers to a sustained decrease in the general price level of goods and services in an economy over a period of time.
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Description
Test your knowledge of inflation with this quiz! Explore the definition of inflation, its impacts, and the concept of deflation. See how much you know about these key economic concepts.
