Sections13.2+and13.3

Pg 343 #1-3 1.)How does inflation affect purchasing power? Give an example. If there is more money out there because of inflation than the purchasing power of money decreases which means that money is worth less which means that you need more money to buy things. 2.)What is the purpose of the Consumer Price Index? The purpose of the Consumer Price Index is to tell how much the prices of certain things have increased or decreased. 3.)What causes a wage-price spiral, and what can it lead to? Wage-price spiral is when the cost of products increase which leads to workers asking for higher wages so they can buy stuff with the price increase in the products. It can lead to inflation

Pg. 353 #9-14 9.)What are the three effects of inflation? Give an example of each. Inflation effects purchasing power which is when money loses the power it had which put into simpler terms means that you need more money to buy things. Inflation also effects people with a fixed income. Those people that can't raise there prices to make more money because they work for a company. Inflation also effects interests rates like if a savings account gives you 7% interests but the inflation rate is 5% then you would only get 2% interest to keep up with inflation. 10.)What role does the Consumer Price Index play in calculating inflation? Consumer Price Index tells you the price increase or decrease in specific parts of the economy. 11.)List and describe at least three ways in which the government combats poverty. Enterprise zones are places where businesses are free of some state, local, and federal taxes. Employment assistance are when people are trained to do jobs so it is easier for them to get the jobs. Welfare reform is when the government helps people get the most basic things in life like food. 12.)What are three causes of inflation and how do they differ? Three causes of inflation are shortages in supplies, the demand for more goods than are available and too much money in the economy. 13.)How is the unemployment rate determined? There is a monthly survey done by the U.S Bureau 14.)Which groups are most affected by by poverty? Use the data from the chapter to support your answer. The minorities and single family, especially single female, are the most affected by poverty as shown in the graph on page 346.