If the Cost of Groceries Goes Up by 10 Percent

question 77

Multiple Choice

If the cost of groceries goes up by 10 percent this year,the amount of groceries you can buy for $50 decreases by that same 10 percent.This is an example of

• A)a decline in GDP.
• B)a decrease in purchasing power.
• C)a recession.
• D)deflation.
• E)a rise in GDP.

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Definitions:

Interest Rates

The cost of borrowing money or the return on investment for savings, usually expressed as a percentage of the total amount loaned or deposited.

Federal Budget Deficits

Occurs when a government's total expenditures exceed the revenue that it generates, excluding money from borrowings.

Inflow of Funds

The movement of money into an organization, sector, or economy for investment, consumption, or other purposes.

Inflationary Gap

The difference between the actual output of an economy and the output it would produce if it were at full employment, indicating higher demand than supply, leading to inflation.