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AP Macroeconomics Inflation — practice questions

Explore 142 free Inflation questions in AP Macroeconomics Economics. Open each question or exercise to read its content, reference answers and available explanation.

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Inflation questions and exercises with answers

Showing questions 1–30 of 142.

Inflation is defined as the situation where most prices in an entire economy are:Read the answer and worked solution →An extreme form of inflation is called:Read the answer and worked solution →To calculate the price level, economists begin with the concept of a:Read the answer and worked solution →The basket of goods consists of the different items typically bought by individuals, businesses or:Read the answer and worked solution →Economists combine the prices of a variety of goods and services into a single:Read the answer and worked solution →The most commonly cited measure of inflation in the United States is the:Read the answer and worked solution →The Producer Price Index is based on prices paid for supplies and inputs by:Read the answer and worked solution →To convert money spent on the basket into an index number, economists choose one year to be the:Read the answer and worked solution →The base year is described as the starting point from which we measure changes in:Read the answer and worked solution →Which two problems are named as arising with basket-based price measurement?Read the answer and worked solution →Expressing inflation figures as index numbers has the stated advantage of allowing easier:Read the answer and worked solution →A few months in 2009 are described as having been:Read the answer and worked solution →A little inflation is described as nibbling away at which measure, helping it decline if necessary?Read the answer and worked solution →The cost of living is described as much higher in New York City than in:Read the answer and worked solution →An economy where prices are falling rather than rising is experiencing:Read the answer and worked solution →Substitution bias arises because a fixed basket cannot capture buyers switching toward goods that have become:Read the answer and worked solution →The CPI and PPI differ chiefly in whose prices they track, with the PPI tracking prices paid by:Read the answer and worked solution →Indexed bonds are raised as a puzzle because a government that borrows is said to gain from:Read the answer and worked solution →Pull the rope to inflation or deflationRead the answer and worked solution →Sort the price indicesRead the answer and worked solution →Stack the inflation termsRead the answer and worked solution →Match each inflation termRead the answer and worked solution →Complete the inflation rulesRead the answer and worked solution →Over the broadest area and longest time in history, the item people used as money was the:Read the answer and worked solution →Economies without money typically rely on:Read the answer and worked solution →Money acting as an intermediary between buyer and seller serves as a:Read the answer and worked solution →Money as the ruler by which we measure values is its role as a:Read the answer and worked solution →Gold, silver and cowrie shells, which have value beyond their use as money, are:Read the answer and worked solution →Money with no intrinsic value that a government declares legal tender is:Read the answer and worked solution →How quickly a financial asset can be used to buy a good or service is its:Read the answer and worked solution →

Worked practice questions

Inflation is defined as the situation where most prices in an entire economy are:

  1. Rising up
  2. Falling down
  3. Fixed by law
  4. Set abroad
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Correct answer: A. Rising up

1. Inflation is a statement about prices across a whole economy. 2. A single price can move without inflation occurring. 3. Inflation is when most prices in an entire economy are rising. 4. Falling prices would instead be deflation. _Source: OpenStax Principles of Macroeconomics for AP Courses 2e (CC BY 4.0), Ch 8 'Inflation'_

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An extreme form of inflation is called:

  1. Megainflation
  2. Hyperinflation
  3. Superinflation
  4. Ultrainflation
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Correct answer: B. Hyperinflation

1. Very rapid inflation has its own name. 2. Inflation is when most prices in an economy are rising. 3. There is an extreme form of inflation. 4. That extreme form is called hyperinflation. _Source: OpenStax Principles of Macroeconomics for AP Courses 2e (CC BY 4.0), Ch 8 'Inflation'_

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To calculate the price level, economists begin with the concept of a:

  1. Basket of goods
  2. Bundle of taxes
  3. Sample of firms
  4. Register of banks
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Correct answer: A. Basket of goods

1. Measuring the price level needs a fixed shopping list. 2. Economists combine prices of many goods into a single price level. 3. They begin with the concept of a basket of goods and services. 4. It consists of the different items people typically buy. _Source: OpenStax Principles of Macroeconomics for AP Courses 2e (CC BY 4.0), Ch 8 'Inflation'_

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