How to find inflation rate - AP Macroeconomics

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Question

Which of the following is not one of the three main causes of inflation?

Answer

Hyper inflation has to do with the rate of inflation, and is not a cause of inflation. Therefore, hyperinflation is not one of the three main causes of inflation.

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Question

Deflation, the increase in value of a currency over time, is much rarer than inflation. Although it can seem like a good thing, what is a problem caused by deflation?

Answer

When money becomes more valuable over time but debts do not change, the money owed on debts will be worth much more than the amount borrowed. This is damaging to borrowers as they must pay back loans that are effectively much more expensive than they agreed to.

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Question

The consumer price index is the key measure that helps to calculate ________.

Answer

The consumer price index is a government published tool calculated by collecting the prices of various retail items periodically. This snapshot view of current prices is one of the chief measures of inflation, as the inflation rate is simply the measure of the change in the consumer price index.

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Question

Which of the following is not one of the three main causes of inflation?

Answer

Hyper inflation has to do with the rate of inflation, and is not a cause of inflation. Therefore, hyperinflation is not one of the three main causes of inflation.

Compare your answer with the correct one above

Question

Deflation, the increase in value of a currency over time, is much rarer than inflation. Although it can seem like a good thing, what is a problem caused by deflation?

Answer

When money becomes more valuable over time but debts do not change, the money owed on debts will be worth much more than the amount borrowed. This is damaging to borrowers as they must pay back loans that are effectively much more expensive than they agreed to.

Compare your answer with the correct one above

Question

The consumer price index is the key measure that helps to calculate ________.

Answer

The consumer price index is a government published tool calculated by collecting the prices of various retail items periodically. This snapshot view of current prices is one of the chief measures of inflation, as the inflation rate is simply the measure of the change in the consumer price index.

Compare your answer with the correct one above

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