Economy & You: Checkpoint 1

Covers inflation, central banks and interest rates, and the unemployment rate.

Five questions on inflation, how central banks respond to it, and reading unemployment numbers correctly.

Question 1 of 5 The CPI (Consumer Price Index) tracks:

Only the price of gasoline The average price of a broad basket of goods and services over time Stock market performance Government spending levels

Question 2 of 5 'Demand-pull inflation' happens when:

Production costs rise and get passed to consumers Demand for goods grows faster than the economy can supply them A central bank lowers interest rates Unemployment rises sharply

Question 3 of 5 When a central bank raises its benchmark interest rate, borrowing across the economy typically becomes:

Cheaper More expensive Unaffected Illegal

Question 4 of 5 A central bank might raise interest rates specifically to:

Increase inflation further Cool spending and demand to help bring inflation down Guarantee stock market gains Eliminate unemployment completely

Question 5 of 5 The official unemployment rate does NOT count as unemployed someone who:

Is actively looking for work but hasn't found it yet Has stopped actively searching for work after getting discouraged Just lost their job yesterday Works full-time

A discouraged worker who stops actively searching is considered outside the labor force entirely, not counted as unemployed - which can make the official rate look better than the full picture suggests.

← Back to Unemployment: What the Numbers Mean Next lesson → Supply and Demand in Everyday Life

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