1. The inflation rate for a given year can be found by __________.

a. taking the percentage change in the Consumer Price Index (CPI) from the previous year to the given year in question

b. calculating the absolute change in the Consumer Price Index (CPI) from the previous year to the given year in question

c. taking the difference in the price levels as measured by the Consumer Price Index (CPI) of the two years

d. none of the above

2.True or false?

Ifthe federal minimum wage grows at a slower rate than inflation, the real value of the minimum wage increases.

a. True

b. False

3.Economists call pensions "defined benefits" plans, because:

a. pension distributions rise with the rise in the CPI

b. pensions have traditionally been set as a fixed nominal dollar amount per year at retirement

c. pensions are always adjusted yearly for inflation

d. pensions are similar to borrowers who benefit from rising inflation

4.True or false?

Inflation makes it easier for consumers to understand market conditions.

a. True

b. False

5.At the beginning of 2017,$1

had about the same purchasing power in overall terms of goods and services as18

cents did in 1972. This is because of the amount of ___________ that has occurred over that time period.

a. deflation

b. inflation

c. economic growth

d. technological change

6.If the price of goods rose by3%

in 2015 and rose by2.5%

in 2016, then the economy is experiencing ______________.

a. a negative inflation rate

b. a falling level of prices

c. a falling inflation rate

d. none of the above

7.If a person has money in a bank account that pays4%

interest, but inflation rises to5%

, then the real rate of return for the money invested in that bank account is _____________.

a. negative

b. positive

c. zero

d. none of the above

8.Which of the following statements isnottrue about inflation?

a. It redistributes purchasing power in the economy.

b. It increases the purchasing power of money.

c. It hurts those people in the economy who are holding considerable amounts of cash.

Anyone who has financial assets invested in a way that the nominal return does not keep

d. upwith inflation will tend to suffer from inflation.

9.Which of the following is true for a homeowner with a30

-year fixed nominal interest rate mortgage?

(Hint: With a fixed nominal interest rate, how does the real interest rate change with inflation?)

a. the homeownerwill benefit from rising inflation

b. the homeowner will lose if inflation rises

c. the homeowner will not be affected by inflation or deflation

d. none of the above are true

10.Whichtwoof the following are ways that firms can make money from inflation?

a. holding lots of cash

b. by paying wages as late as possible

c. by paying bills as late as possible

d. all of the above

below is the link of the b..O@12.1:x19a4UAX@6/Introduction-to-Inflation