The term deflation refers to:
A decrease in the overall price level of goods and services in an economy
An increase in the overall price level of goods and services in an economy
A decrease in the purchasing power of a currency
An increase in the purchasing power of a currency
Correct Answer :
A. A decrease in the overall price level of goods and services in an economy
Related Questions
Which of the following is a measure of the overall level of prices in an economy?
Consumer Price Index (CPI)
Gross Domestic Product (GDP)
Money Supply (M2)
Aggregate Demand (AD)
The term regressive tax refers to a tax:
That takes a larger percentage of income from low-income individuals than from high-income individuals
That takes a larger percentage of income from high-income individuals than from low-income individuals
That is the same for all individuals regardless of income level
That is only imposed on corporations
The term complementary goods refers to goods that are:
Used together to satisfy a particular want or need
Used interchangeably to satisfy a particular want or need
Unrelated to each other in satisfying wants or needs
Completely unrelated in any way
The term structural deficit refers to a deficit that exists even when the economy is operating at:
Full employment
Below full employment
A recessionary gap
An inflationary gap
The term hyperinflation refers to:
An extremely high and rapidly increasing inflation rate
A moderate and stable inflation rate
A period of deflation in the economy
A period of steady economic growth
The term money multiplier refers to:
The ratio of the change in the money supply to the change in the monetary base
The ratio of government spending to the level of GDP
The ratio of taxes to disposable income
The ratio of investment to savings in an economy
The term deadweight loss refers to:
The loss of economic efficiency that occurs when a market is not in equilibrium
The loss of consumer surplus that occurs when prices increase
The loss of producer surplus that occurs when prices decrease
The loss of government revenue due to taxes
The term velocity of money refers to:
The speed at which money changes hands in an economy
The total amount of money in circulation in an economy
The total amount of money held by households and businesses
The total amount of money held by banks as reserves
If the government runs a budget deficit, it means that:
Government spending exceeds government revenue
Government revenue exceeds government spending
Government revenue and spending are equal
Taxes are too high
The term open market operations refer to:
The buying and selling of government securities by the central bank to influence the money supply
The buying and selling of goods and services in international markets
The buying and selling of stocks in the stock market
The buying and selling of consumer goods in a free market economy
The term complementary input refers to inputs that are:
Used together in the production process
Used interchangeably in the production process
Completely unrelated in the production process
Unrelated to the production process
If the government increases taxes and decreases government spending, it is implementing:
Contractionary fiscal policy
Expansionary fiscal policy
Contractionary monetary policy
Expansionary monetary policy
The term real wage rate refers to:
The purchasing power of wages after accounting for inflation
The nominal wage rate adjusted for taxes
The average wage rate in an economy
The wage rate set by the government
Which of the following is an example of a regressive tax?
Sales tax
Progressive income tax
Property tax
Corporate income tax
The term opportunity cost of capital refers to:
The return that could have been earned if the capital was used in an alternative investment
The total cost incurred in producing a good or service
The cost of goods and services in an open economy
The total cost of producing all units of a good or service
The term Phillips curve depicts the relationship between:
Inflation and unemployment
Government spending and taxes
Savings and investment
Consumption and income
The term Laffer curve is used to illustrate the relationship between:
Tax rates and tax revenue
Government spending and economic growth
Inflation and unemployment
Interest rates and investment
Which of the following is considered a leading economic indicator?
Consumer Price Index (CPI)
Gross Domestic Product (GDP)
Stock Market Index
Unemployment Rate
The long-run aggregate supply curve is vertical because it is determined by:
The level of government spending
The level of potential output
The level of aggregate demand
The level of inflation
The term automatic stabilizers refers to:
Government policies that automatically adjust to stabilize the economy during economic fluctuations
The tools used by the central bank to stabilize the money supply
The policies implemented by the government to control inflation
The policies implemented by the government to control unemployment
The aggregate demand curve shows the relationship between:
The price level and the quantity of real GDP demanded
The interest rate and investment spending
The price level and the quantity of money demanded
The exchange rate and net exports
The money supply is primarily determined by:
The Federal Reserve
Commercial banks
The Treasury Department
The President of the United States
The term stagflation refers to a situation where:
There is high inflation and high unemployment simultaneously
There is low inflation and low unemployment simultaneously
There is high inflation and low unemployment simultaneously
There is low inflation and high unemployment simultaneously
The term commodity bundle in economics refers to:
A collection of goods and services used to calculate inflation
A collection of goods and services that a consumer typically buys
A collection of goods and services used to calculate GDP
A collection of goods and services produced in a specific industry
If the nominal interest rate is 5% and the inflation rate is 3%, the real interest rate is:
8%
2%
3%
5%
The term monetary base refers to:
The total amount of money in circulation in an economy
The total amount of money held by banks as reserves
The total amount of money held by households and businesses
The total amount of money created by the central bank
The term money market refers to:
The market for financial assets with maturities of one year or less
The market where foreign exchange rates are determined
The market for long-term government bonds
The market for commodities like gold and silver
The term capital gains tax is a tax on:
Profits earned from selling an asset, like a stock or real estate, at a higher price than it was purchased
Profits earned from producing and selling goods and services
Wages earned from labor
Interest earned from savings accounts
The term supply-side economics focuses on:
Policies that aim to increase the productive capacity of the economy
Policies that aim to increase aggregate demand in the economy
Policies that aim to control inflation through monetary policy
Policies that aim to control inflation through fiscal policy
The term balance of payments refers to:
A record of all economic transactions between residents of a country and the rest of the world in a given period
The difference between government revenues and expenditures in a given period
The difference between exports and imports of goods and services in a given period
The total amount of money in circulation in a country