Krugman's Economics for AP

Margaret Ray

Chapter 14 Inflation: An Overview - all with Video Answers

Educators

Chapter Questions

Problem 1

Which of the following is true regarding prices in an economy?
I. An increase in the price level is called inflation.
II. The level of prices doesn't matter.
III. The rate of change in prices matters.
a. I only
b. II only
c. III only
d. II and III only
e. I, II, and III

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02:14

Problem 2

If your nominal wage doubles at the same time as prices double, your real wage will
a. increase.
b. decrease
c. not change.
d. double.
e. be impossible to determine.

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Numerade Educator

Problem 3

If inflation causes people to frequently convert their dollars into other assets, the economy experiences what type of cost?
a. price level
b. shoe-leather
c. menu
d. unit-of-account
e. none of the above

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Problem 4

Because dollars are used as the basis for contracts, inflation leads to which type of cost?
a. price level
b. shoe-leather
c. menu
d. unit-of-account
e. none of the above

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Problem 5

Changing the listed price when inflation leads to a price increase is an example of which type of cost?
a. price level
b. shoe-leather
c. menu
d. unit-of-account
e. none of the above

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