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1. Over the past 80 years, prices in the U.S. have risen on average about
a.
2 percent per year.
b.
4 percent per year.
c.
3.6 percent per year.
d.
6 percent per year.
2. Over the past 80 years, the overall price level in the U.S. has experienced a(n)
a.
4-fold increase.
b.
10-fold increase.
c.
13-fold increase.
d.
17-fold increase.
3. Over the last 80 years, the average annual U.S. inflation rate was about
a.
3.6 percent, implying that prices have increased 16-fold.
b.
4 percent, implying that prices have increased 17-fold.
c.
4 percent, implying that prices have increased 16-fold.
d.
3.6 percent, implying that prices increased about 17-fold.
4. Inflation can be measured by the
a.
change in the consumer price index.
b.
percentage change in the consumer price index.
c.
percentage change in the price of a specific commodity.
d.
change in the price of a specific commodity.
5. Inflation can be measured by the
a.
change in the consumer price index. Inflation in the U.S. has averaged about 2.5% over the last 80 years.
b.
change in the consumer price index. Inflation in the U.S. has averaged about 4% over the last 80 years.
c.
percentage change in the consumer price index. Inflation in the U.S. has averaged about 3.6% over the last 80
years.
d.
percentage change in the consumer price index. Inflation in the U.S. has averaged about 4% over the last 80
years.
6. Which of the following is not correct?
a.
The inflation rate is measured as the percentage change in a price index.
b.
For the last 40 or so years, U.S. inflation hasn’t shown much variation from its average rate of about 2 percent.
c.
During the 19th century there were long periods of falling prices in the U.S.
d.
Some economists argue that the costs of moderate inflation are not nearly as large as the general public
believes.
7. In which of the following cases was the inflation rate 12 percent over the last year?
a.
One year ago the price index had a value of 110 and now it has a value of 120.
b.
One year ago the price index had a value of 120 and now it has a value of 132.
c.
One year ago the price index had a value of 134 and now it has a value of 150.
d.
One year ago the price index had a value of 145 and now it has a value of 163.
8. If the price level increased from 120 to 130, then what was the inflation rate?
a.
1.1 percent.
b.
7.7 percent.
c.
10.0 percent.
d.
8.3 percent.
9. If the price level increased from 120 to 144, then what was the inflation rate?
a.
24 percent.
b.
25 percent.
c.
20 percent.
d.
17 percent.
10. If the price level increased from 200 to 250, then what was the inflation rate?
a.
50 percent
b.
25 percent
c.
20 percent
d.
None of the above is correct.
11. If the price level last year was 180 and this year it is 176, then
a.
there was inflation of 2.3 percent.
b.
there was inflation of 4.0 percent.
c.
there was deflation of 2.2 percent.
d.
there was deflation of 4.0 percent.
12. When prices are falling, economists say that there is
a.
disinflation.
b.
deflation.
c.
a contraction.
d.
an inverted inflation.
13. Deflation
a.
increases incomes and enhances the ability of debtors to pay off their debts.
b.
increases incomes and reduces the ability of debtors to pay off their debts.
c.
decreases incomes and enhances the ability of debtors to pay off their debts.
d.
decreases incomes and reduces the ability of debtors to pay off their debts.
14. Between 1880 and 1896 the average level of prices in the U.S. economy
a.
fell 23 percent.
b.
fell 4 percent.
c.
rose 23 percent.
d.
rose 50 percent.
15. In the last part of the 1800’s
a.
deflation made it harder for farmers to pay off their debt.
b.
deflation made it easier for farmers to pay off their debt.
c.
inflation made it harder for farmers to pay off their debt.
d.
inflation made it easier for farmers to pay off their debt.
16. The term hyperinflation refers to
a.
the spread of inflation from one country to others.
b.
a decrease in the inflation rate.
c.
a period of very high inflation.
d.
inflation accompanied by a recession.
17. Which of the following statements about U.S. inflation is not correct?
a.
Low inflation was viewed as a triumph of President Carter's economic policy.
b.
There were long periods in the nineteenth century during which prices fell.
c.
The U.S. public has viewed inflation rates of even 7 percent as a major economic problem.
d.
The U.S. inflation rate has varied over time, but international data show even more variation.
18. Which of the following statements concerning the history of U.S. inflation is not correct?
a.
Prices rose at an average annual rate of about 3.6 percent over the last 80 years.
b.
There was about a 17-fold increase in the price level over the last 80 years.
c.
Inflation in the 1970s was below the average over the last 80 years.
d.
The United States has experienced periods of deflation.
19. Which of the following is correct?
a.
A period of hyperinflation is a period of extraordinarily low inflation.
b.
A period of deflation is any period during which the inflation rate is decreasing.
c.
In the 1970s, U.S. inflation averaged about 7.8 percent per year
d.
All of the above are correct.
20. There was hyperinflation during the
a.
period 1880-1896 in the United States.
b.
1970s in the United States.
c.
early part of the current century in Zimbabwe.
d.
All of the above are correct.
21. Which country is correctly matched with its 2015 inflation rate?
a.
9 percent inflation in the United States.
b.
3.6 percent inflation in Russia.
c.
59 percent inflation in Venezuela.
d.
4.9 percent inflation in India.
22. In early 2008, the central bank of Zimbabwe announced the inflation rate in that country had reached
a.
60 percent.
b.
80 percent.
c.
220 percent.
d.
24,000 percent.
23. Economists agree that
a.
neither high inflation nor moderate inflation is very costly.
b.
both high and moderate inflation are quite costly.
c.
high inflation is costly, but they disagree about the costs of moderate inflation.
d.
moderate inflation is as costly as high inflation.
24. Which of the following did NOT happen during the late 19th century in the U.S.?
a.
Falling crop prices reduced farmers' incomes
b.
From 1880 to 1896, the price level fell by 23 percent
c.
Farmers lobbied for government policies to reduce inflation
d.
Farmers had reduced ability to pay off debts
25. Hyperinflation can be explained by
a.
the market for loanable funds.
b.
the quantity theory of money.
c.
the velocity theory of money.
d.
the market for federal funds.
26. Which of the following is NOT correct?
a.
In 2015, the inflation rate was 7.8 percent in the U.S.
b.
In 2015, the inflation rate was 84.1 percent in Venezuela
c.
In 2015, the inflation rate was 4.9 percent in India
d.
In 2015, the inflation rate was 1.5 percent in China.
