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Flash Quiz
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1
A measure of the average price of a given class of goods or services relative to the price of the same goods and services in a base year is called a:
A)real price.
B)real quantity.
C)rate of inflation.
D)price level.
E)price index.
2
The situation when the price of most goods and services are falling over time is called:
A)inflation.
B)disinflation.
C)a boom.
D)deflation.
E)an expansion.
3
A quantity measured in terms of current dollar value is called a _______ quantity.
A)nominal
B)real
C)deflated
D)indexed
E)relative
4
Inflation reduces economic efficiency through all of the following channels EXCEPT by:
A)Distorting incentives through interaction with the tax laws.
B)Obscuring information transmitted by prices.
C)Inducing people to minimize cash holdings.
D)Reducing the purchasing power of cash holdings.
E)Interfering with long-term planning.
5
The nominal interest rate equals the:
A)real interest rate minus the inflation rate.
B)real interest rate plus the inflation rate.
C)inflation rate minus the real interest rate.
D)inflation rate times the real interest rate.
E)real interest rate divided by the inflation rate.
6
The tendency for nominal interest rates to be high when inflation is high and low when inflation is low is known as:
A)the consumer price index
B)deflating
C)indexing
D)shoe leather costs
E)the Fisher effect
7
The percentage change in the price level is the:
A)nominal interest rate.
B)real interest rate.
C)Consumer Price Index.
D)rate of relative price change.
E)rate of inflation.
8
The way to convert a nominal quantity to a real quantity is to:
A)multiply the nominal quantity by a price index.
B)divide the nominal quantity by a price index.
C)decrease the nominal quantity by the rate of inflation.
D)increase the nominal quantity by the rate of inflation.
E)divide the nominal quantity by the rate of inflation.
9
The way to index a nominal quantity to inflation is to:
A)multiply the nominal quantity by a price index.
B)divide the nominal quantity by a price index.
C)decrease the nominal quantity by the rate of inflation.
D)increase the nominal quantity by the rate of inflation.
E)divide the nominal quantity by the rate of inflation.
10
The price of a good or service in comparison to the prices of other goods and services is the _____ price.
A)nominal
B)base-year
C)monetary
D)current
E)relative





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