Matt Curfman - Richmond Brothers • Richmond Brothers, Inc.

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Inflation Quiz

What do you really know & can you get a perfect score?

Opinion needed: What's the BIGGEST problem we face these days?

You might be surprised (or not).

According to surveys, it's not gun violence, violent crime, illegal immigration, or even racism if you ask most folks.

It's inflation.1

And it's fueling some very serious worries.

In fact, most folks worry a great deal about inflation.2

And these concerns have grown so much recently that they're now at an all-time high — we haven't been this worried about inflation since the 1980s.2

That's causing a lot of us to rethink our financial decisions, big and small. And many are bracing for the worst.3

Are you?

Well, it could depend on what you know about inflation.

That's because the more you know, the better you'll be at checking your worries — and making smarter decisions when there's a fresh financial shock.4

So, what do you really know about inflation?

Let's find out!

Test your knowledge with a 7-question True/False Quiz, covering the basics of inflation.

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True or False: Find Out What You Actually Know About Inflation

Stacks of Cash

1. Inflation measures price increases in goods and services over time

Answer: True. The Fed says, "Inflation is the increase in the prices of goods and services over time."5

2. Inflation can be measured by an increase in the cost of one product or service

Answer: False. The Fed says, "Inflation cannot be measured by an increase in the cost of one product or service, or even several products or services. Rather, inflation is a general increase in the overall price level of the goods and services in the economy."5

Purse

3. Inflation is caused by insufficient goods and services to meet the high demand and growing money supply

Answer: True. The Fed says, "Inflation is caused when the money supply in an economy grows at a faster rate than the economy's ability to produce goods and services."6

4. When inflation is high, the Federal Reserve typically lowers interest rates

Answer: False. The Fed says, "When inflation is too high, the Federal Reserve typically raises interest rates to slow the economy and bring inflation down. When inflation is too low, the Federal Reserve typically lowers interest rates to stimulate the economy and move inflation higher."7

5. The Federal Reserve strives to achieve a long-term inflation rate of 3% to 5% to maximize employment and keep prices stable

Answer: False. It's 2 percent. The Fed says, "The Federal Open Market Committee (FOMC) judges that inflation of 2% percent over the long run is most consistent with the Federal Reserve's mandate for maximum employment and price stability."5

Wallet

6. Suppose the prices of things you buy double over the next 10 years. If your income also doubles, you will be able to buy more than you can buy today

Answer: False. If both your income and prices double in 10 years, you'll be able to buy the SAME as you're able to buy now (not more or less).8

7. Inflation that is too low can weaken the economy

Answer: True. The Fed says, "When inflation runs well below its desired level, households and businesses will come to expect this over time, pushing expectations for inflation in the future below the Federal Reserve's longer-run inflation goal. This can pull actual inflation even lower, resulting in a cycle of ever-lower inflation and inflation expectations. If inflation expectations fall, interest rates would decline too. In turn, there would be less room to cut interest rates to boost employment during an economic downturn."9

Even if you scored 100%, it's still easy to overlook the facts when inflation anxiety creeps in.

Financial Lesson:

No Matter What You Know, Here's How to Weather Inflation Better

How did you do?

Were you surprised by any of the answers ー or your score?

Even if you scored 100%, it's still easy to overlook the facts when inflation anxiety creeps in.

The truth is inflation doesn't just hit our wallets. It can have real psychological impacts ー like serious stress and even depression.10

And that can cloud our judgment and make us feel out of control. When that happens, we're not in the best headspace to make good financial decisions. And we tend to be impulsive.11

That's true no matter how much money you do or don't have.

But that doesn't mean we're automatically going to be worse off because of inflation.

Actually, our anxieties and stress about inflation can change in a matter of seconds.

In fact, thinking about our long-term goals ー even for just a few seconds ー can release some pressure and help us feel more in control.11

Beyond that, we can revisit where we're at financially and we can make adjustments and finetune our plans as the markets shift.

We can also check in with the people we trust for a fresh perspective and sound advice.

Sincerely,

Matt Curfman - Richmond Brothers

Richmond Brothers, Inc.

https://www.richmondbrothers.com

(517) 435-4040

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Matt Curfman - Richmond Brothers

Richmond Brothers, Inc.

Not receiving our newsletter?

Get insightful info on finances and more in your inbox every month with the

VISUAL INSIGHTS NEWSLETTER

By submitting your personal information, you consent to be contacted by a financial professional regarding your financial strategy for retirement.