Income and Purchasing Power

True/False 1. Businesses will sometimes base part of their pricing decision on the spending patterns of consumers. 2. Advertising is a method used by businesses to stimulate interest in buying products.

True/False 3. Some products go down in price over time, even when the country is not in a time of deflation. 4. Preparing a shopping list will not help consumers avoid impulse buying.

True/False 5. Economizing and optimizing are consumer buying strategies that people use at different times. 6. Mild inflation of 2 to 3 percent is never good for the economy.

7. Inflation that occurs because businesses raise prices due to rising costs of producing goods and services. Cost-push Inflation Demand-pull Inflation Real-cost Inflation All of the above None of the above

8. The rate that banks charge their most creditworthy business customers. Discount rate Federal Funds Rate Prime Rate Reserve Rate

9. The type of inflation that occurs when prices are rising so rapidly they are out of control. Deflation Disinflation Hyperinflation Reflation

10. The rate the banks can borrow from the excess reserves of other banks. Discount Rate Federal Funds Rate Prime Rate Reserve Rate

11. As resources diminish or become harder to get, prices rise in the form of Cost-push Inflation Demand-pull Inflation Real-cost Inflation All of the above None of the above

12. The rate the banks have to pay to borrow money from the Fed. Discount Rate Federal Funds Rate Prime Rate Reserve Rate

13. Setting a price based on the cost to produce and deliver a product plus a markup for profit margin. Cost-Plus Pricing Market-Based Pricing Value-Based Pricing All of the above None of the above

14. As general price levels rise, the value of money Falls Rises Stays the same Is not affected

15. Setting a price based on how much the seller thinks consumers are willing to pay Cost-Plus Pricing Market-Based Pricing Value-Based Pricing All of the above None of the above

16. A situation in which prices increase because consumers want to buy more goods and services than producers supply. Cost-push Inflation Demand-pull Inflation Real-cost Inflation All of the above None of the above

17. The method of setting a price so that it will be competitive with similar products currently being sold. Cost-Plus Pricing Market-Based Pricing Value-Based Pricing All of the above None of the above

18. Which selling strategy is illustrated by having a store location that is easy for customers to visit? Convenience Customer Service Meeting Needs and Wants Create demand through advertising

19. A decrease in the general level of prices for goods and services. Deflation Disinflation Hyperinflation Reflation

20. Which selling strategy is illustrated by having the store having the philosophy “The customer is always right”? Convenience Customer Service Meeting Needs and Wants Create demand through advertising

6 boxes for $4.75= _______________ 7 pounds for $9.78= _______________ ExpenseThis year Last YearDollar Change % of Change >4.5% change <4.5% change Rent$615$590 Groceries$200$195 Water$18$16