Chapter+13

March 2, 2011 Read pgs. 338-350 & answer pg 343 #1-3, pg 353 # 9-14

1. Inflation affects purchasing power because as inflation rises so do the prices and in turn the power of the dollar falls leaving the purchasing power lower than it was. An example would be Germany in WWII when children used stacks of money to play with because their economy was down in the duuuumps. 2. The consumer price index or CPI is used by the Bureau of labor statistics each month to measure the price of a standard group of goods meant to represent the "market basket". 3. The wage-price spiral is when wages go up so do the prices of goods and then with prices going up so will the prices and so forth and so forth. 9. Prices rising, dollar power going down, and general rise of products are all effects of inflation. 10. The CPI helps calculate the general prices for goods and that helps see how inflation is affecting products. 11. The government helps fight poverty by making enterprise zones and offering both employment assistance and welfare. 12. The three causes of inflation are the quantity theory meaning that there is too much money in the economy, the demand-pull theory stating that demand for goods exceeds existing supplies, and cost-push theory when producers raise prices in order to meet increased costs. 13. Unemployment is measured with the census then the BLS use the data to calculate the number of unemployed. 14. Inner city african americans with single parents raising children are the most affected by poverty.