ECN 211 MIDTERM 1 2026 EXAM PREPARATION
PACK KEY SUPPLY AND DEMAND ELASTICITY
AND MARKET EQUILIBRIUM WITH SAMPLE
QUESTIONS
◉ Rising price is _______ Answer: inflation
◉ Falling price is _______ Answer: deflation
◉ To measure price level, we must use _______ & GDP Answer:
Consumer Price Index (CPI)
◉ CPI measures ________ Answer: change in cost of what you buy
◉ What factors can influence CPI? Answer: -Consumers substitute
goods
-Quality of goods change
-New goods introduced
◉ __________ is higher costs for firms lead to firms raising prices
Answer: Cost-push inflation
, ◉ __________ is more money in people's pockets leads to biding up of
prices Answer: Demand-pull inflation
◉ What is the working definition of inflation? Answer: more money
chasing fewer goods
◉ What is hyperinflation? Answer: >50% price increase per month
◉ When does hyperinflation typically happen? Answer: In war, when
the government prints money to pay for bills
◉ What are menu costs? Answer: costs to firms of changing prices
◉ What happens when inflation is not evenly distributed? Answer:
Misallocation of resources
◉ Debtors benefit, lenders are hurt in ________ Answer: inflation
◉ Costs of _______ creates rigidity in interest rates due to zero lower
bound Answer: deflation
◉ What is the surplus challenge? Answer: Individuals and
companies often earn more than they want to spend
PACK KEY SUPPLY AND DEMAND ELASTICITY
AND MARKET EQUILIBRIUM WITH SAMPLE
QUESTIONS
◉ Rising price is _______ Answer: inflation
◉ Falling price is _______ Answer: deflation
◉ To measure price level, we must use _______ & GDP Answer:
Consumer Price Index (CPI)
◉ CPI measures ________ Answer: change in cost of what you buy
◉ What factors can influence CPI? Answer: -Consumers substitute
goods
-Quality of goods change
-New goods introduced
◉ __________ is higher costs for firms lead to firms raising prices
Answer: Cost-push inflation
, ◉ __________ is more money in people's pockets leads to biding up of
prices Answer: Demand-pull inflation
◉ What is the working definition of inflation? Answer: more money
chasing fewer goods
◉ What is hyperinflation? Answer: >50% price increase per month
◉ When does hyperinflation typically happen? Answer: In war, when
the government prints money to pay for bills
◉ What are menu costs? Answer: costs to firms of changing prices
◉ What happens when inflation is not evenly distributed? Answer:
Misallocation of resources
◉ Debtors benefit, lenders are hurt in ________ Answer: inflation
◉ Costs of _______ creates rigidity in interest rates due to zero lower
bound Answer: deflation
◉ What is the surplus challenge? Answer: Individuals and
companies often earn more than they want to spend
