HISTORY
WORLD WAR II
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A drop in the price of goods and services
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A government taking over the management of the national economy
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A period when a nation’s currency loses value
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None of the above
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Detailed explanation-1: -The following is an example of inflation: There is a large bird flu epidemic that wipes out 25% of the national supply of turkeys. As a result, the price of turkey meat goes up significantly. Inflation can happen when more money is available to be spent.
Detailed explanation-2: -A fall in inflation means the value of money declines at a slower rate. Sometimes a lower rate of inflation causes the Central Bank to cut interest rates. For example, in 1992, interest rates were 15%, which meant savers were doing very well.
Detailed explanation-3: -Savers. Traditionally savers lose from inflation. If prices rise, the value of money falls, and the real value of savings declines.
Detailed explanation-4: -Deflation is when the general price levels in a country are falling-as opposed to inflation when prices rise. Deflation can be caused by an increase in productivity, a decrease in overall demand, or a decrease in the volume of credit in the economy.