This quiz works best with JavaScript enabled. Home > Economics > Macroeconomics > Inflation And Deflation > Inflation And Deflation – Quiz 11 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Inflation And Deflation Quiz 11 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Which of the following define as 'rises in the price level caused by higher costs of production? A) Cost-push inflation. B) Demand-pull inflation. C) Monetary inflation. D) Hyperinflation. Show Answer Correct Answer: A) Cost-push inflation. 2. Did prices go up or down in 2009? 2008 CPI = 212 2009 CPI = 214 A) Up. B) Down. Show Answer Correct Answer: A) Up. 3. If minimum wage is $ 10 an hour now, and it keeps up with inflation at a rate of 8%, how much would it be 20 years from now? A) $ 160. B) $ 469. C) $ 46.60. D) $ 10. Show Answer Correct Answer: C) $ 46.60. 4. Inflation that occurs when there is more money printed than goods and service being produced. A) Cost push. B) Demand pull. C) Money demand inflation. D) Money supply. Show Answer Correct Answer: D) Money supply. 5. Which out of the following is phenomenon that leads to Demand-Pull Inflation? A) It is a situation when aggregate demand in an economy outpaces aggregate supply. B) It is a situation of persistent rise in inflation along with dip in growth and increase in unemployment. C) It is a situation caused by an increase in prices of inputs like labour, raw material etc. D) It is a situation when a nation experiences very high and accelerating inflation. Show Answer Correct Answer: A) It is a situation when aggregate demand in an economy outpaces aggregate supply. 6. What is the target for inflation set by many central banks today? A) 4%. B) 3%. C) 2%. D) 1%. Show Answer Correct Answer: C) 2%. 7. How is Sam affected by inflation of college prices? Sam puts money away in a 529 college savings account for his child. A) Helped. B) Hurt. C) Not affected directly. D) None of above. Show Answer Correct Answer: B) Hurt. 8. The phrase that "money is neutral in the long run, " means: A) If the money supply triples, prices will triple. B) After enough time, money is worthless. C) Currency exchange rates are always fluctuating. D) Money is just a middle-man for the barter system. Show Answer Correct Answer: A) If the money supply triples, prices will triple. 9. If CPI last year was 177 and the CPI this year is 186, what is the rate of inflation? A) 8%. B) 7%. C) 6%. D) 5%. Show Answer Correct Answer: D) 5%. 10. What happens to the slope of the ground before a volcanic eruption? A) Slope decreases. B) Slope stays the same. C) Slope increases. D) None of above. Show Answer Correct Answer: C) Slope increases. 11. Which of these are likely to be winners in periods of high, unanticipated inflation? A) Savers. B) Lenders. C) Borrowers at fixed interest rates. D) People on fixed incomes. Show Answer Correct Answer: C) Borrowers at fixed interest rates. 12. Prices driven higher due to an increase in higher unit wages, import prices, indirect taxes etc A) Demand Pull. B) Cost push. Show Answer Correct Answer: B) Cost push. 13. To close an inflationary gap, the government could A) Run budget deficits. B) Decrease income taxes. C) Increase development expenditure. D) Run budget surpluses. Show Answer Correct Answer: D) Run budget surpluses. 14. Hyperinflation can occur when: A) The government increases regulation on an industry. B) The government prints excessive money to fund itself. C) The government raises taxes to fund itself. D) None of them are correct. E) Only a & b. Show Answer Correct Answer: B) The government prints excessive money to fund itself. 15. Cost-Push theory is when producers raise prices to meet the increased costs A) True. B) False. Show Answer Correct Answer: A) True. 16. Why are food and energy taken out of core inflation measures? A) Central banks do not look at commodity or retail prices when monitoring inflation. B) Food and energy prices fluctuate from month to month, so inflation is hard to gauge through these prices. C) They are bought by everybody, so they are not important. D) Their prices usually remain stable, with few changes over time. Show Answer Correct Answer: B) Food and energy prices fluctuate from month to month, so inflation is hard to gauge through these prices. 17. What is the consumer price index? A) A measure of prices of housing and rental cost all over the country. B) An index of the cost of living for all U.S. Consumers. C) An index determined by measuring the price of standard goods bought by consumers. D) None of above. Show Answer Correct Answer: C) An index determined by measuring the price of standard goods bought by consumers. 18. What are the negative effects of high inflation on an economy? A) Stimulating economic growth, increasing employment opportunities, and boosting consumer spending. B) Eroding purchasing power, reducing consumer and investor confidence, distorting price signals, increasing uncertainty, and creating income inequality. C) Encouraging investment, promoting innovation, and fostering economic development. D) Stabilizing prices, reducing income inequality, and improving financial stability. Show Answer Correct Answer: B) Eroding purchasing power, reducing consumer and investor confidence, distorting price signals, increasing uncertainty, and creating income inequality. 19. Which of the following best describes the term Foreign Direct Investment (FDI)? A) When a country makes an investment into a company. B) When a domestic country invests into its own companies. C) When a company makes an investment into a foreign country and has right to control. D) When foreign individuals invest in domestic stock markets. Show Answer Correct Answer: C) When a company makes an investment into a foreign country and has right to control. 20. What is Jin's real rate of return? Jin makes 8% on Amazon stock and inflation was 1%. A) 8%. B) 1%. C) 9%. D) 7%. Show Answer Correct Answer: D) 7%. ← PreviousNext →Related QuizzesMacroeconomics QuizzesEconomics QuizzesInflation And Deflation Quiz 1Inflation And Deflation Quiz 2Inflation And Deflation Quiz 3Inflation And Deflation Quiz 4Inflation And Deflation Quiz 5Inflation And Deflation Quiz 6Inflation And Deflation Quiz 7Inflation And Deflation Quiz 8 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books