Understanding Inflation

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

False (B)

<p>False (B)</p> Signup and view all the answers

<p>To reduce the chances of a panic and assure that today's citizens have access to physical money.</p> Signup and view all the answers

The decrease in value of money relative to overall quantity and production.

Increase in the number of people that can influence economic demand.

Institutions responsible for managing a nation's currency and money supply.

The movement and volume of money in an economy.

Periods of reduced economic activity usually leading to a recession.

The decline in worth or purchasing power of currency.

Modifications made by central banks to balance economic conditions.

A metaphor illustrating how increased currency decreases value.

In the analogy, red marbles represent common, widely available currency.

In the analogy, grey marbles denote less common currency.

In the analogy, green marbles reflect the most valuable and least available currency.

Addition of more money into the economy by central banks.

An economy where currency values remain consistent until altered.

An example of how increasing currency lowers the value of all currency.

Fears regarding the state of the economy leading to decreased confidence.

The process by which central banks manage the money supply and interest rates.

The purchasing power of a currency compared to goods and services.

Factors affecting the economy’s performance, including supply and demand.

Strategies by central banks to prevent economic crises and public fear.