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Questions and Answers
What is the formula for calculating the inflation rate?
What is the formula for calculating the inflation rate?
- CP1 year (x) – CPI year (x-1) / CPI year (x-1) (correct)
- CPI year (x-1) - CP1 year (x) / CP1 year (x-1)
- CPI year (x-1) / CP1 year (x) - 1
- CP1 year (x) / CPI year (x-1) - 1
What can lead to demand pull inflation?
What can lead to demand pull inflation?
- High levels of government saving
- Increases in money supply – easy credit (loans)/ low interest rates can lead to excessive borrowing and spending (correct)
- Low levels of consumer spending
- Decrease in money supply and high interest rates
What is a possible cause of cost push inflation?
What is a possible cause of cost push inflation?
- Government budget surplus
- Decreased production costs
- Lowering of interest rates
- Increase in price of oil and raw materials (correct)
In the context of inflation, what does excess demand compared to supply cause?
In the context of inflation, what does excess demand compared to supply cause?
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What is the impact of governments 'printing money' to finance their overspending?
What is the impact of governments 'printing money' to finance their overspending?
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What does the Consumer Price Index (CPI) measure?
What does the Consumer Price Index (CPI) measure?
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How often is the Consumer Price Index (CPI) measured?
How often is the Consumer Price Index (CPI) measured?
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What does the annual rate of inflation measure?
What does the annual rate of inflation measure?
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What is reviewed every 6 years to ensure it reflects Australia’s buying habits?
What is reviewed every 6 years to ensure it reflects Australia’s buying habits?
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What does the increase in the general level of prices of goods and services over time refer to?
What does the increase in the general level of prices of goods and services over time refer to?
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