ECONOMICS
INFLATION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Cost-push Inflation
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Demand-pull Inflation
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Monetary Inflation
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Imported Inflation
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Detailed explanation-1: -Measuring inflation The cost of this basket at a given time expressed relative to a base year is the consumer price index (CPI), and the percentage change in the CPI over a certain period is consumer price inflation, the most widely used measure of inflation.
Detailed explanation-2: -Unexpected inflation leads to high-risk premiums and economic uncertainty. With higher uncertainty, lenders ask for a premium to compensate for the uncertainty. This leads to higher costs of borrowing, hence reducing economic activity because it discourages investments.
Detailed explanation-3: -Inflation is a situation in an economy where prices of goods and services increase and the purchasing power of people decreases. Whereas, in deflation, there is a downward movement of the general price level of goods and services.
Detailed explanation-4: -Find the average price in both years: $1.60 in 1992 and $2.62 in 2012. Enter the data into the equation. Subtract the 1992 price from the 2012 price ($1.02) Divide the difference by the original price. ($1.02 รท $1.60 = 0.6375) Multiply the previous answer by 100 to get a percentage.