Which of the following statements about inflation is true? A. Inflation is not a problem because it is just another way for the government to collect revenue—an alternative to the income tax or the sales tax. B. Inflation is a tax on holding money. C. Inflation occurs when real GDP grows more rapidly than the quantity of money. D. Inflation is a tax on spending money.

Which of the following statements about inflation is true? A. Inflation is not a problem because it is just another way for the government to collect revenue—an alternative to the income tax or the sales tax. B. Inflation is a tax on holding money. C. Inflation occurs when real GDP grows more rapidly than the quantity of money. D. Inflation is a tax on spending money.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter18: Introduction To Macroeconomics: Unemployment, Inflation, And Economic Fluctuations

Section: Chapter Questions

Problem 11P

See similar textbooks

Similar questions

What type of inflation is caused by an increase in the purchasing power of people? a. Cost push b. Demand pull c. Built in d. Chronic
Let's say the inflation rate in an economy turns out to be higher than expected. Will the following people, or bank, be affected? Helped, hurt, or unaffected? a. Someone keeping a large quantity of cash in a shoe box in their closet. b. A bank lending money at a fixed rate of interest c. A union member with a COLA wage contract d. A person who is not due to receive a pay raise for another 11 months
Which of these is not a negative effect of inflation? a. It lowers down the value of money b. It rises the level of employment c. It increases the price of goods and services d. It lowers down the purchasing power of people
On the way into school you hear the following report on the radio: "inflation for the month of February was 0.4%. Over the year inflation was 2.2%." Which of the following options best explains what these figures mean? Select one: a. Inflation in February was much slower than it was in other months from the past year. b. The prices of household necessities, excluded household luxuries, increased by 2.2%, compared to 12 months ago. c. The prices of the things a typical urban consumer buys, as estimated by the Bureau of Labor Statistics, increased on average 2.2%, compared to 12 months ago. d. The government increased prices by 2.2% over the past year in order to keep pace with production costs.
What are the costs of inflation? a. All of the above b. Import becomes expensive c. Borrowers loose and creditors gain d. None of the above e. Fixed income earners gain
Which of these is not a factor that causes demand-pull inflation? a. Private consumption b. Population c. Government spending d. Supply side shocks
Which of the following statements about prices and inflation is not correct? A. The inflation rate shows the percentage change in prices across periods of time. B. Prices generally increase at the same rate across most periods of time. C. The price level measures the average prices of goods and services across the economy. D. Inflation represents a general rise in prices over periods of time
Which of the following is not an economic effect of inflation? a. None O b. Difficulty in doing long term contracts c. Savings increases consumption decreases O d. Income distribution in favour of borrower e. Decrease in purchasing power of income.
In 1 paragraph, describe what has happened to inflation over the past decade.
True or False Since people buy a lot of food and oil (gasoline), we should pay most attention to fluctuations in prices of those two items when talking about inflation. Explain.
Consider the following: Price Index in 2017 86 Price Index in 2018 100 Price Index in 2019 108 Price Index in 2020 120 Price Index in 2021 146 a. The base year is 2018 b. Calculate the inflation rate from 2018 to 2019. 8 % (Enter your response as a percentage rounded to two decimal places.) c. Calculate the inflation rate from 2019 to 2020. 11.11 % (Enter your response as a percentage rounded to two decimal places.) d. Assume the cost of a market basket in 2018 is $2,137.0. (Enter your responses rounded to one decimal place.) Calculate the cost of the same basket of goods and services in 2017. Calculate the cost of the same basket of goods and services in 2021.
Suppose there are 1200 units of money on an island, but money grows by 5.32% per year. Islanders spend each unit of money 2.3 times per year on average and this spending grows by 1.98%. The price level is at 34. GDP is expected to grow at 4.83%. What is the level of inflation? Answer this as a percentage without the percentage sign and round this to two digits after the decimal. ex. If you found the rate to be 5.125%, answer 5.13.