Page 1 ECO 2013 Principles of Macroeconomics Practice Questions Chapter 6 Professor Alvin Chiang ___ 1.Inflation is a: A) steady rise in the unemployment rate across all labor markets. B) general rise in interest rates. C) decline in confidence in prices. D) general rise in prices. ___ 2.Most economists believe that the consumer price index ______ the rate of inflation. ___ 3.The GDP deflator for the base year is: ___ 4.If nominal GDP in 2014 is $20,000 billion while real GDPis $16,000 billion, then the GDP deflator in 2014 is: 150. ___ 5.All of the following are true for inflation EXCEPT that: A) those on a fixed income lose purchasing power during inflationary periods. B) creditors do not receive the full amount of the loan because the principle and interest rates are fixed. C) debtors are hurt during inflationary times because the amount they pay creditors back increases. D) increased prices due to high inflation cause consumers to spend less money.