12Mtb700-UniversityofDayton.pdf

Chapter 12 INFLATION* Topic: Inflation and the Price Level Inflation and the Price Level Skill: Conceptual 5) If the price level for the last three months has Topic: Inflation and the Price Level Skill: Recognition been 112, 125, and 126, we would say 1) Inflation is defined as a continuing increase in A) inflation has been constant over the three A) the prices of specific products. months. B) the wages of all workers. B) inflation was more rapid between the first and C) the price level. second month than between the second and D) money GDP. third month. Answer: C C) inflation was less rapid between the first and second month than between the second and Topic: Inflation and the Price Level third month. Skill: Recognition D) inflation has steadily increased over the three 2) If this year’s price level exceeds last year’s, months. A) the inflation rate between these years has been Answer: B positive. B) the inflation rate is accelerating. Topic: Inflation Rate C) deflation is occurring. Skill: Analytical 6) If the price level for 2003 is 220 and for 2004 is D) no relative price changes are occurring. Answer: A 250, what is the rate of inflation between the two years? Topic: Inflation and the Price Level A) 30 percent Skill: Recognition B) 13.6 percent 3) When an economy experiences inflation th