Exploring Economics Notgrass Lesson 34 Questions With 100 % Correct Answers | latest

Define hyperinflation and give a historic example. - A huge and rapid increase in the cost of living, such as what people in Germany experienced in the early 1920s. How did the federal government pay for those? - The government borrowed money to cover some of the debt, but it also simply printed more money to pay for the increased spending. How do economists define inflation? - A general, across-the-board increase in prices throughout the economy, to the point that it affects almost all people What causes demand-pull inflation? - An increase in aggregate demand that is not accompanied by an increase in aggregate supply What is cost-push inflation? - A decrease in aggregate supply which leads to a decrease in productivity, a decrease in supply, and a resulting increase in prices for scarce resources What is deflation? - An overall decline in prices What is purchasing power? - The ability of individual consumers to buy goods and services, at least in the short run What two factors caused stagflation in the early 1970s? - Significant inflation along with rising unemployment What two factors were the main causes of increased government expenditures in the 1960s? - The federal government dramatically expanded social programs such as Medicare, Medicaid, and welfare and it spent huge sums on the war in Vietnam.When does a wage-price spiral occur? - When producers and consumers both try to protect themselves from the effects of expected inflation