Title: QUIZ: A Dollar’s Worth: Inflation Is Real -- Page One Economics®
Course: Kelly's Copying and Exporting Course > Section: A Dollar’s Worth: Inflation Is Real -- Page One Economics®

Q: Which statement is an example of inflation?
- The price of gasoline increases by $1 a gallon after a weather disaster.
- The average price level of many things you buy decreases over time.
- The price of a gallon of milk increases by 50 cents in one week.
- The average price level of many things you buy increases over time.
A: The average price level of many things you buy increases over time.

Q: Louisa has a savings account that pays interest at an annual percentage rate of 2 percent. The current annual inflation rate is 4 percent. Based on this information, and assuming these rates stay constant in the future, which statement is true?
- The purchasing power of Louisa’s savings account income increases by 2 percent each year.
- The purchasing power of Louisa’s savings account income decreases by 2 percent each year.
- The purchasing power of Louisa’s savings account income remains the same each year.
- The purchasing power of Louisa’s savings account income decreases by 6 percent each year.
A: The purchasing power of Louisa’s savings account income decreases by 2 percent each year.

Q: Which statement is true based on Figure 4 in the article?
- Apparel prices increased more than medical care prices.
- Medical care prices increased while computer prices decreased.
- The overall CPI is the same as the CPI for computers.
- Medical care prices increased at the same rate as computer prices.
A: Medical care prices increased while computer prices decreased.

Q: Which statement is true based on Figure 1 in the article?
- The purchasing power of the dollar remained the same in the past 10 years.
- The purchasing power of the dollar was more in 1995 than in 2020.
- The purchasing power of the dollar increased in the past 5 years.
- The purchasing power of the dollar increased from 1983 to 1993.
A: The purchasing power of the dollar was more in 1995 than in 2020.

Q: Inflation
- is a concern for the nation’s economy but not for individuals.
- affects individual consumers in different ways.
- is a concern for individuals but not for the overall economy.
- causes the value of a dollar to increase over time.
A: affects individual consumers in different ways.

Q: Which statement is true based on Figure 2 in the article?
- The average annual change in the prices paid by urban consumers for a market basket of consumer goods and services remained the same from 1983 to 2010.
- The figure shows the annual change in the prices paid by rural consumers for a market basket of consumer goods and services from 1983 to 2020.
- Consumers needed more dollars to buy the same goods and services in 2020 than they needed in 1983.
- Consumers needed fewer dollars to buy the same goods and services in 2020 than they needed in 1983.
A: Consumers needed more dollars to buy the same goods and services in 2020 than they needed in 1983.

Q: Kara’s annual income is $32,000. She feels financially secure knowing she will receive a 2 percent raise each year. The current inflation rate is 3 percent. Which statement best describes Kara’s purchasing power going forward?
- Kara’s purchasing power depends on the inflation rate each year.
- Kara’s purchasing power will decrease 3 percent each year.
- Kara’s purchasing power will increase 2 percent each year.
- Kara’s purchasing power will remain the same each year.
A: Kara’s purchasing power depends on the inflation rate each year.

Q: The CPI market basket
- intends to be representative of the goods and services an average urban consumer buys on a regular basis.
- is made up of eight major groups of goods and services that 93 percent of the people in rural areas and in the Armed Forces buy most often.
- includes fewer major groups of goods and services than the number of groups measured by the core CPI.
- is made up of six major groups of goods and services that 93 percent of the people in urban areas buy most often.
A: intends to be representative of the goods and services an average urban consumer buys on a regular basis.

Q: Cost-push inflation
- is often referred to as “too much money chasing too few goods.”
- is the same type of inflation as demand-pull inflation.
- does not affect the individual consumer.
- is caused by an increase in production costs.
A: is caused by an increase in production costs.

Q: The Federal Reserve
- seeks to achieve inflation that is as close to 0 percent as possible.
- seeks to achieve an inflation rate above 5 percent to promote economic growth.
- seeks to achieve inflation that averages 2 percent over time.
- does not monitor the inflation rate in any way.
A: seeks to achieve inflation that averages 2 percent over time.

Q: All consumers experience the same inflation rate because everyone buys the same market basket.
- True
- False
A: False

Q: Tanika loaned her friend $5,000. Her friend paid back $5,020 at the end of the year. This paid the loan in full and included $20 for interest. If the inflation rate for the year was 2 percent, Tanika actually lost purchasing power by making this loan.
- True
- False
A: True

Q: The BLS collects data on the price of a market basket of goods. The information is released on a monthly basis.
- True
- False
A: True

Q: Consumers do not need to be concerned with inflation or inflation rates. These are important only to overall economic conditions.
- True
- False
A: False