JeopardyInflation Deflation

Costs of Price instability Price Index Unemployment

Q $100

Q $200

Q $300

Q $400

Q $500

Q $100 Q $100Q $100 Q $100

Q $200 Q $200 Q $200 Q $200

Q $300 Q $300 Q $300 Q $300

Q $400 Q $400 Q $400 Q $400

Q $500 Q $500 Q $500 Q $500

Final Jeopardy

$100 Question from Inflation

Define Inflation

$100 Answer from Inflation

Increase in the average price levels in an economy(must say price levels or prices to indicateMany prices increasing)

$200 Question from Inflation

Explain Cost push Inflation.

$200 Answer from Inflation

Cost push inflation is when pricesIncrease due to the fact that resourcesCosts are increased, therefore aggregate Supply decreases, causing price levels to increase

$300 Question from Inflation

Explain the relationship betweenExcessive monetary growth andDemand pull inflation

$300 Answer from Inflation

Excessive monetary growth causesDemand pull inflation. More specificallyWhen there is more money printed, peopleHave more so they spend more, causing Aggregate demand to increase, causingPrice levels to rise

$400 Question from Inflation

Draw on the board a graph whichIllustrates demand pull inflation.

$400 Answer from Inflation

Graph should have downwardSloping AGGREGATE demand upwardSloping AGGREGATE supply curves. Y axisLabeled Price levels, X axis labeled Real GDP,Or National Income, or Total Output. AD Should increase to indicate demand pull. NoPoints awarded for mislabeling.

$500 Question from Inflation

Mrs. Berntson plans to purchase a lake homeThis summer in Minnesota. If she takes out a15 years Loan for $200,000 at a fixed interest rate of 5%, How would she be affected if 5 years later there was unanticipatedInflation which continued for the remainder ofThe loan?

$500 Answer from Inflation

She would be helped because the moneyShe borrowed would have more purchasing Power when she borrowed it than when she Paid it back.

$500 Answer from H1

Your Text Here

$100 Question from Deflation

Define Deflation

$100 Answer from Deflation

The decrease in averagePrice levels

$200 Question from Deflation

The inflation rate inZimbabwe has recently gone from1 million % to 10%. Is this deflation?Explain.

$200 Answer from Deflation

No. It is not deflation,Now there is just less inflation

$300 Question from Deflation

Explain Good Deflation

$300 Answer from Deflation

Good deflation is good becauseIt is caused by increases in aggregate Supply which means more production,More output for lower prices available.

$400 Question from Deflation

Explain bad deflation

$400 Answer from Deflation

Bad deflation is consideredBad because it is caused by decreasesIn aggregate demand, which can causeFurther problems like unemployment.

$500 Question from Deflation

Explain what a deflationarySpiral is.

$500 Answer from Deflation

When prices are going down, peopleExpect them to go down further, thereforeThey put off purchases waiting for prices toBe lower. When they do this, AD decreases Even further, making the problem worse.

$100 Question from Instability

What does price stability mean?

$100 Answer from Instability

The economic goal of having lowLevels of inflation and deflation, or atThe very least, predictable stable prices

$200 Question from Instability

Explain how inflation causesA loss of purchasing power to someoneOn a fixed income

$200 Answer from H3

Something that illustrates the Same point: If someone has an allowance of 100 dirhamsAnd enjoyed going to movies which cost 30Dirhams, they could go to 3 movies in a week.If prices of movie ticket went up to 50 dirhams,They could now only see 2.

$200 Answer from H3

Your Text Here

$300 Question from Instability

Explain inflation's affect onsavings?

$300 Answer from Instability

A persons savings has morePurchasing power when it is putIn to the account than when they Take it out if there is inflation

$400 Question from Instability

Explain inflation's affect International competitiveness andHow this would impact an economy's GDP.

$400 Answer from H3

When price levels go up in aCountry, people abroad will buyLess from them and look for a Cheaper substitute. Therefore theCountry with the higher prices will exportLess, which causes their GDP to go down

$500 Question from Instability

Explain how bad deflation canLead to unemployment and moredeflation.

InstabilityWhen AD decreases, pricesGo down, as a result companiesSell less and Receive less for their product,Since they do not have to produce as muchAnd do not have enough money, they willFire some people. Now less people have jobs,So less people have money, and will buy less

And so it continues

$100 Question from Indices

Explain the consumer priceindex

$100 Answer from Indices

Adds up consumer prices in Categories to figure out howMuch inflation there is for consumers

$100 Answer from H4

Your Text Here

$200 Question from Indices

Explain the ProducerPrice index

$200 Answer from Indices

Adds up producer prices(costs of common resourcesUsed) to find inflation for producers

$200 Answer from H4

Your Text Here

$300 Question from Indices

Why does the PPI oftenPredict the CPI?

$300 Answer from Indices

Because consumerProducts are made from resources.If costs are going up for producers, theyWill also raise the price of their products.

$400 Question from Indices

What does the GDP price indexMeasure?

$400 Answer from Indices

Inflation rate for the entirecountry

$500 Question from Indices

Give two reasons why CPIIs not a perfect measure for Inflation (evaluate)

$500 Answer from IndicesNot every fits the same mold.Prices differ in all shops.Consumption habits change, so mayNot be accurate any more.Baskets may change from year to year.Countries measure inflation differently.Any other reasonable answer.

$100 Question from Unemployment

What does it mean to an economistTo have full employment?

$100 Answer from Unemployment

Either there is no cyclical unemploymentOr that everyone who wants a job has one

$200 Question from Unemployment

Define frictional unemployment

$200 Answer from Unemployment

Unemployment caused byPeople being between jobs (usually eitherFired or chose to do something different

$300 Question from Unemployment

Define cyclical / demand deficientunemployment

$300 Answer from unemployment

Recessionary phases cause peopleTo lose jobs. Companies cannot affordTo keep people working because no bodyIs buying their goods/services. CausedBy decreases in AD.

$400 Question from Unemployment

Define Real wage unemployment

$400 Answer from Unemployment

When Unions and priceControls like minimum wageCause unemployment

$400 Answer from Unemployment

Your Text Here

$500 Question from Unemployment

Explain two limitations to measuringUnemployment (why does it not give a Perfect representation of unemploymentIn a country?) ...evaluate

$500 Answer from Unemployment

People may have jobs, but are underemployed.There are discouraged workers out there whoShould be counted.It does not break down unemployment intoSmaller categories for analysis.Other.

Final Jeopardy

What are the 3 macro economic goals, andWhat is the major indicator used to measureIf each is being met or not.

Final Jeopardy AnswerGrowth/Development:

Real GDP and HDI (must say realFor Growth)

Price Stability: CPI or any price index will work

Full Employment:Unemployment rate