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Inflation

  •  English    14     Public
    inflation
  •   Study   Slideshow
  • What is the basic definition of inflation?
    A general increase in prices and the fall in the purchasing value of money.
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  • If you have $10 today and inflation is high, will that $10 buy more or less bread next year?
    Less bread
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  • Which group is hurt MOST by unexpected inflation: Savers or Borrowers?
    Savers
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  • True or False: Inflation acts like a "hidden tax" on people with fixed incomes.
    True
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  • Why might a homeowner with a fixed-rate mortgage actually benefit from inflation?
    They pay back their debt with money that is worth less than when they borrowed it.
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  • What is "Purchasing Power"?
    The amount of goods or services that one unit of currency can buy.
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  • How does high inflation usually affect social stability?
    It increases it (leads to strikes, protests, and unhappiness).
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  • What is "Hyperinflation"?
    Extremely rapid or out-of-control inflation (usually over 50% per month)
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  • If a worker gets a 3% raise but inflation is 5%, did their "real" income go up or down?
    Down (by 2%).
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  • Which is a "physical asset" that usually protects against inflation:
    Real estate
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  • Why does inflation discourage people from putting money in a standard savings account?
    Because the interest earned is often lower than the rising cost of living.
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  • Who is usually responsible for trying to control inflation in a country?
    The Central bank
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  • If a country has high inflation, are its exports likely to become more expensive or cheaper for other countries?
    More expensive
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  • What happens to the "Value of the Dollar" during inflation?
    It decreases.
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