Exploring Economics Notgrass Lesson 34 | Questions & Answers (100 %Score) Latest
Updated 2024/2025 Comprehensive Questions A+ Graded Answers | With Expert Solutions
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
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.
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.
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.
What two factors caused stagflation in the early 1970s? - Significant inflation along with rising
unemployment
What is deflation? - An overall decline in prices
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
When does a wage-price spiral occur? - When producers and consumers both try to protect themselves
from the effects of expected inflation
What is purchasing power? - The ability of individual consumers to buy goods and services, at least in
the short run
Updated 2024/2025 Comprehensive Questions A+ Graded Answers | With Expert Solutions
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
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.
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.
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.
What two factors caused stagflation in the early 1970s? - Significant inflation along with rising
unemployment
What is deflation? - An overall decline in prices
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
When does a wage-price spiral occur? - When producers and consumers both try to protect themselves
from the effects of expected inflation
What is purchasing power? - The ability of individual consumers to buy goods and services, at least in
the short run
