Inflation: why prices rise and what a dollar buys

Grade 7 Social Studies Worksheet - Challenge Me

Circle the best answer.

1. Read this first

   How fast prices rose each year

   (computed from Bureau of Labor Statistics annual averages), columns Year | Rise in the index from the year before: 2020 | 1.2%; 2021 | 4.7%; 2022 | 8.0%; 2023 | 4.1%; 2024 | 2.9%. Then, below the table: Cause and effect chain "Why prices rose fast in 2021 and 2022": [1] shipping and factory delays left fewer goods ready to sell; [2] energy prices rose; [3] people's spending on goods grew quickly; [4] prices rose faster than in the years before. Arrows: 1 → 4, 2 → 4, 3 → 4. Below the chain: economists debate how much each cause added. To slow inflation, the Federal Reserve raised interest rates in 2022 and 2023; economists debate the size of the effects.

2. 1.

   In Esme's table, how much did prices rise in 2022?

   • 4.7%
   • 258.8%
   • 4.1%
   • 8.0%
3. 2.

   In which year shown did prices rise the least, Jun asks?

   • 2022, the year with the biggest rise
   • 2020
   • 2023
   • 2024
4. 3.

   In an example, a $50 basket rose by the 2022 rate. About what did it cost after, Luz asks?

   • About $58
   • About $4
   • About $46
   • About $54
5. 4.

   Did prices fall in 2023, when the rate dropped to 4.1%, Milo asks?

   • The table does not say
   • No: they rose more slowly
   • Yes: a lower rate means prices fell
   • Yes, by 4.1%
6. 5.

   How many causes in the chain point to faster price rises, Noah asks?

   • One, the shipping delays
   • Two
   • Four
   • Three
7. 6.

   Which cause in the chain is about having fewer goods to sell, Pia asks?

   • Shipping and factory delays
   • Energy prices rising
   • People's spending growing quickly
   • Prices rising faster
8. 7.

   Ren reads the words rate of inflation. What do they mean here?

   • How fast prices rose in a year, as a percent
   • The price index number for one year
   • A bank's interest rate
   • The price of fuel
9. 8.

   Why did the Federal Reserve raise interest rates in 2022 and 2023, by the note, Tala asks?

   • To slow inflation
   • To make prices rise faster
   • To lower fuel prices directly
   • To end shipping delays
10. 9.

    Which sentence about the Federal Reserve's actions is careful, by the note, Ari asks?

    • The effects are proved to be zero
    • Raising rates ended inflation in one month
    • Economists debate the size of the effects
    • It lowered rates
11. 10.

    Bo's note says, "Prices went down in 2024 because the rate fell to 2.9%." Which fix is right?

    • Leave it: prices went down
    • Change it: prices rose 29%
    • Change it: prices rose more slowly
    • Change it: prices stayed the same