Econ 102 - Principles of Macroeconomics » Spring 2023 » Inflation Quiz

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Question #1
If wages rise by 12 percent at the same time prices rise by 3 percent, then the increase in real wages is equal to
A.   3 percent.
B.   12 percent.
C.   9 percent.
D.   6 percent.
Question #2
If both borrowers and lenders anticipate the rate of inflation correctly, then
A.   borrowers will lose real income.
B.   lenders will lose real income.
C.   neither borrowers nor lenders will lose real income.
D.   both borrowers and lenders will lose real income.
Question #3
The reason that inflation rarely harms workers is that
A.   wages fall when prices rise.
B.   the minimum wage rate automatically rises when the price level rises.
C.   wages rise at the same time prices rise.
D.   nominal income falls as prices rise.
Question #4
If you as a lender want an increase in purchasing power of 4 percent from making a loan and you set the nominal interest rate at 9 percent, then your
A.   real rate of interest is 36 percent.
B.   real rate of interest is 13 percent.
C.   expected rate of inflation is 5 percent.
D.   expected rate of inflation is 13 percent.
Question #5
Inflation
A.   is caused by the price of one good increasing
B.   means that all goods experience an increase in price
C.   rarely occurs in the U.S. economy
D.   is a general price level increase
Question #6
If ten years ago the price of a movie ticket was $5 and the average hourly wage was $10, and today the price of a movie ticket is $8 and the average hourly wage is $20, then
A.   workers now need to work longer hours to earn one movie ticket.
B.   the relative price of movies has remained constant.
C.   movies are now relatively more expensive in terms of work hours.
D.   movies are now relatively cheaper in terms of work hours.
Question #7
When comparing the costs of inflation to society, it is important to distinguish between
A.   expected versus unexpected inflation.
B.   low versus high rates of inflation.
C.   real versus nominal inflation.
D.   high price levels and low price levels.
Question #8
The difference between the purchase price of a financial asset and the sale price of the asset is called a(n)
A.   investment.
B.   capital gain.
C.   profit.
D.   dividend.
Question #9
Older Americans living on a pension and therefore on a fixed income, tend to be made
A.   worse off when prices fall without a cost of living adjustment.
B.   better off when prices rise.
C.   worse off when prices rise without a cost of living adjustment.
D.   better off when inflation rates rise.
Question #10
The real wage rate is defined as the wage rate divided by
A.   the money supply.
B.   nominal GDP.
C.   the price level.
D.   the interest rate.
Question #11
In the period of U.S. history known as the Great Depression, the rate of inflation was generally
A.   increasing rapidly
B.   uncertain
C.   positive
D.   negative
Question #12
The nominal interest rate is the sum of the
A.   expected rate of inflation and the rate of price level increase.
B.   historic rate of inflation and the expected rate of inflation.
C.   real interest rate and the expected rate of inflation.
D.   real interest rate and the historic rate of inflation.

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