Q1. Which of the following statements regarding inflation is most accurate?

A)    Inflation is a persistent increase in the general price level of goods and services.

B)    As a result of inflation, all borrowers gain at the expense of lenders.

C)    The purchasing power of money increases as a result of inflation.

Q2. If the consumer price index (CPI) at year-end was 142 and the beginning of the year was 135, then the rate of inflation during the year is:

A)    4.7%.

B)    2.8%.

C)    5.2%.

Q3. Which of the following statements regarding inflation is most accurate?

A)    Inflation occurs when there is a steady increase in the relative prices of key commodities.

B)    An economy experiences inflation when there is a persistent increase in the prices of almost all goods and services.

C)    Inflation is present if the prices of some goods and services are increasing.

Q4. During the seminar, “Inflation – Friend or Foe?” Joe Lebow, an analyst with Greenwald & Associates, was discussing the difference between inflation and price level. He made the following two statements:

Statement 1: To measure the inflation rate of a currency, one should calculate the annual percentage change in the price level. The calculation of this change shows the connection between the inflation rate and the price level.

Statement 2: The higher the price level in the current year compared to the price level in the previous year, the higher is the inflation rate of a country. Any increase in the price level is evidence of (positive) inflation.

Are the statements as made by Lebow regarding inflation and price levels CORRECT?

        Statement 1                            Statement 2

A) Incorrect                                     Incorrect

B) Correct                                       Incorrect

C) Correct                                       Correct

答案和详解如下：

Q1. Which of the following statements regarding inflation is most accurate?

A)    Inflation is a persistent increase in the general price level of goods and services.

B)    As a result of inflation, all borrowers gain at the expense of lenders.

C)    The purchasing power of money increases as a result of inflation.

Correct answer is A)

Inflation is defined as a persistent increase in the price level over time. Inflation indicates that there has been a general decline in the purchasing power of a currency. Fixed-rate borrowers gain at the expense of lenders when inflation is greater than expected.

Q2. If the consumer price index (CPI) at year-end was 142 and the beginning of the year was 135, then the rate of inflation during the year is:

A)    4.7%.

B)    2.8%.

C)    5.2%.

Correct answer is C)

The inflation rate can be calculated as (142 –135) / 135 = 5.2%.

Q3. Which of the following statements regarding inflation is most accurate?

A)    Inflation occurs when there is a steady increase in the relative prices of key commodities.

B)    An economy experiences inflation when there is a persistent increase in the prices of almost all goods and services.

C)    Inflation is present if the prices of some goods and services are increasing.

Correct answer is B)

Inflation is a persistent increase in the price level over time. Inflation occurs when there is a sustained increase in the prices of almost all goods and services. Inflation indicates a decline in the purchasing power of a currency.

Q4. During the seminar, “Inflation – Friend or Foe?” Joe Lebow, an analyst with Greenwald & Associates, was discussing the difference between inflation and price level. He made the following two statements:

Statement 1: To measure the inflation rate of a currency, one should calculate the annual percentage change in the price level. The calculation of this change shows the connection between the inflation rate and the price level.

Statement 2: The higher the price level in the current year compared to the price level in the previous year, the higher is the inflation rate of a country. Any increase in the price level is evidence of (positive) inflation.

Are the statements as made by Lebow regarding inflation and price levels CORRECT?

        Statement 1                            Statement 2

A) Incorrect                                     Incorrect

B) Correct                                       Incorrect

C) Correct                                       Correct

Correct answer is B)

Statement 1 is correct. However, Statement 2 is incorrect because a one-time increase in the price level is not necessarily inflation. Inflation is an on-going process; not a one-time increase in the price level.

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