It's the Law!
Vocabulary Workout
Stages of inflation
Short Answer
True or False
100
This "law of economics" says that: when the supply of something goes up, the price per unit of that thing goes down. When the supply goes down, the price goes up.
What is The Law of Supply and Demand
100
______________ is the speed at which dollars change hands. (When this is HIGH, people trade their $$ quickly, meaning that demand for $$ is low. When this is LOW, people trade their $$ slowly, meaning the demand for $$ is high.)
What is VELOCITY If a dollar bill is traded once per year, its velocity is one. If that dollar changes hands five times in a year, then its velocity is five.
100
In this stage of inflation (1st, 2nd or 3rd), people have caught on and are spending their $$ quickly. Prices rise faster than money supply because each unit of money is changing hands faster. Many people want to get rid of it quickly and are willing to accept less for it.
What is STAGE 2
100
Throughout the centuries, what 2 metals have had the characteristics of good money?
What is gold and silver. (Good money is defined as...small, easy to move, widely desired, corrosion-proof, scarce, and hard to copy.)
100
Large increases in the supply of money are ALWAYS followed by increases in wages and prices.
What is TRUE
200
This "law of economics" says that: Bad money drives good money out of circulation (out of use). In other words, people always save good money & buy things with bad money.
What is Gresham's Law.
200
This is an increase in the amount of money. It causes the money to lose value, so prices rise!
What is INFLATION.
200
This is the runaway stage of inflation where the whole population is in a PANIC to get rid of the $$ as soon as they get their hands on it. In this stage, no one can stop the $$ from losing its value. Even IF the printing presses are stopped, the $$ becomes worthless because no one wants it.
What is STAGE 3.
200
A b__________ m____________ is producing, buying, or selling something against the wishes of the government. Example: Liquor was a product of this during the "Prohibition Era."
What is the Black Market.
200
With a few exceptions, there has NEVER been a case where wages and prices rose rapidly without someone creating a lot of money.
What is TRUE.
300
This is one of the laws of economics-- It means that almost nothing is free; Someone must pay for it.
What is TANSTAAFL there ain't no such thing as a free lunch!!!!
300
This is reducing the value of a coin by reducing the amount of precious metal in it
What is DEBASING
300
What stage is this? Suppose you earn $20 and you want to buy an mp3. Last year the player cost $35, but the government has been printing $$ so the player has risen to $38.99. You decide to hang onto your $$ hoping the player will come back down to $35.
What is What is STAGE 1. You did NOT spend, holding onto your $$ so they did not circulate.
300
This man is the Current Chairman of the Federal Reserve. His name is ___________ ________________.
Who is Ben Bernanke.
300
Inflation is rising prices.
What is FALSE. Rising prices are a RESULT of rising prices.
400
This "law" is a fact of life which deals with production and distribution of wealth. You cannot change it, and it applies all over the world.
What is LAW OF ECONOMICS.
400
This is the beginning of a depression that never went all the way.
What is RECESSION
400
What stage is this? Suppose you still have your $20 and officials are printing $$. The price of the mp3 is up to $38.99, and you decide to buy now before the price goes higher. Your brother, who intended to buy an mp3 next year, also decided to buy now before the price goes higher.
What is STAGE 2. Your brother has SPEEDED up his buying. He is getting rid of his $$ faster than he intended. The money is circulating faster!
400
The book, "Whatever happened to Penny Candy" is based on what 2 schools of economic theory.
What is Austrian and Monetarist.
400
Inflation causes business people to make mistakes.
What is TRUE.
500
Back in 1270 AD, a government that ruled much of Asia was led by Kublai Khan. He wanted to buy things, but was afraid to raise taxes. He desperately wanted silver & gold, so he invented 'paper money' or 'paper gold' as a substitute. If he needed 20 oz. gold, he would write "20 oz. gold" on a slip of paper and sign his name. At first people refused to accept it. So he passed a _____ _____ law where anyone who REFUSED TO TAKE THE PAPER MONEY WAS PUNISHED.
What is Legal Tender Law.
500
This is a decrease in the AMOUNT of money, which causes a decrease in prices. Also, this usually causes depressions and falling prices.
What is DEFLATION
500
In this stage, demand for dollars is HIGH and the velocity of your dollars is LOW.
What is STAGE 1.
500
What characteristics must good money have? Name 2 of the 6. (Hint: Recall the list from '100' point value.)
What is... (any of these 6) small, easy to move, widely desired, corrosion-proof, scarce, hard to copy
500
Inflation causes recessions and depressions.
What is TRUE.
M
e
n
u