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Inflation and Deflation (Grade 5)

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Inflation and Deflation

1. 
Inflation is an increase in the value of currency.
  1. True
  2. False
2. 
Deflation reduces the cost of goods or services.
  1. True
  2. False
3. 
Inflation can be caused when the rate of money entering the economy is greater than that of the economy's growth.
  1. True
  2. False
4. 
Most economists believe that an inflation rate of zero is best to reduce the possibility of a recession.
  1. True
  2. False
5. 
Deflation typically occurs when the supply for a good or service is higher than its demand.
  1. True
  2. False
6. 
The best way to end a cycle of deflation is to pause purchases until the prices stop falling.
  1. True
  2. False
7. 
Economists use the Consumer Price Index, which is a statistical tool that measures price differences of goods and services over time, to determine if there is a period of inflation or deflation.
  1. True
  2. False
8. 
Hyperinflation, a period where the price of goods increases extremely rapidly, in Hungary after World War II led the country to print a 100 million trillion Pengo note which is the highest denomination note ever issued.
  1. True
  2. False
9. 
Deflation benefits people in debt.
  1. True
  2. False
10. 
A way to counteract deflation is to add more money into the economy.
  1. True
  2. False
11. 
In order to maintain a healthy economy, most countries try to keep their inflation rates somewhere between 2 and 3% per year.
  1. True
  2. False

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