1.
The consumer price index was 140.3 in 1992 and 144.5 in 1993. Therefore, the rate of inflation in 1993 was about:
A.
6.7 percent.
B.
3.0 percent.
C.
1.2 percent.
D.
13.6 percent.
2.
If the rate of inflation is 12 percent per year, the price level will double in about:
4 years.
6 years.
10 years.
12 years.
3.
R-1 F08071
Refer to the above diagram. An increase in total demand in Range l will:
cause unemployment and deflation.
increase employment, output, and the price level.
increase employment and output, but not the price level.
increase the price level, but not employment and output.
4.
Inflation initiated by increases in wages or other resource prices is labeled:
demand-pull inflation.
demand-push inflation.
cost-push inflation.
cost-pull inflation.
5.
Suppose that a person's nominal income rises by 5 percent and the price level rises from 125 to 130. The person's real income will:
fall by about 1 percent.
remain constant.
rise by about 4 percent.
rise by about 1 percent.
6.
In 1994 Ortega's nominal income rose by 8 percent and the price level rose by 5 percent. We can conclude that Ortega's real income:
may have either increased or decreased.
rose by 13 percent.
rose by 3 percent.
fell by 13 percent.
E.
fell by 3 percent.
7.
Cost-of-living adjustment clauses (COLAs):
invalidate the "rule of 70."
apply only to demand-pull inflation.
increase the gap between nominal and real income.
tie wage increases to changes in the price level.
8.
Inflation is undesirable because it:
arbitrarily redistributes real income and wealth.
always is cumulative; that is, creeping inflation invariably causes hyperinflation.
always tends to make the distribution of income less equal.
reduces everyone's standard of living.
is always accompanied by a declining real output.
