This quiz works best with JavaScript enabled. Home > Economics > Macroeconomics > Inflation And Deflation > Inflation And Deflation – Quiz 13 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Inflation And Deflation Quiz 13 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. ..... are common products that consumers buy in a month.(used for CPI) A) Market basket. B) Inflation. C) Fiscal policies. D) Monetary policy. Show Answer Correct Answer: A) Market basket. 2. What is demand-pull inflation? A) Demand-pull inflation is when the demand for goods and services exceeds the supply, causing prices to rise. B) Demand-pull inflation is when the supply of goods and services exceeds the demand, causing prices to rise. C) Demand-pull inflation is when the demand for goods and services decreases, causing prices to rise. D) Demand-pull inflation is when the government increases taxes, causing prices to rise. Show Answer Correct Answer: A) Demand-pull inflation is when the demand for goods and services exceeds the supply, causing prices to rise. 3. An economy is experiencing a period of deflation. What must be happening? A) The average price level is falling. B) The output of the economy is falling. C) The rate of inflation is falling. D) The real value of money is falling. tagsInflation, Deflation, Disinflation. Show Answer Correct Answer: A) The average price level is falling. 4. What is the challenge of inflation when it comes to long term saving? A) You need to find a way to make your money grow so that hopefully it grows faster than inflation. B) Since prices keep going up, you are out of luck no matter what you do. C) Saving your money in a jar is the safest thing because you can't lose it. D) None of above. Show Answer Correct Answer: A) You need to find a way to make your money grow so that hopefully it grows faster than inflation. 5. This measurement is criticized for overstating inflation because it uses a fixed basket of goods. A) GDP Deflator. B) Consumer Price Index. C) Personal Consumption Expenditures Index. D) None of above. Show Answer Correct Answer: B) Consumer Price Index. 6. Which cause of inflation occurs when prices rise in the economy due to an increase in the costs of the factors of production? A) Cost-push inflation. B) Demand-pull inflation. C) Price-push inflation. D) Supply-pull inflation. E) None of the answers. Show Answer Correct Answer: A) Cost-push inflation. 7. Which of the following must happen as a result of inflation? A) A decline in uncertainty. B) A fall in the value of money. C) An improvement in the balance of payments. D) An increase in savings. Show Answer Correct Answer: B) A fall in the value of money. 8. The business closures and consumer anxiety caused by Covid19 is likely have what kind of effect on the economy? A) Inflation. B) Deflation. Show Answer Correct Answer: B) Deflation. 9. What are the effects of inflation on fixed-income earners? A) An increase in their standard of living. B) A reduction in their standard of living. C) An increase in the purchasing power of their fixed income. D) No effect on their standard of living. Show Answer Correct Answer: B) A reduction in their standard of living. 10. True or false? An expectation of increasing deflation is likely to slow down household consumption. A) True. B) False. Show Answer Correct Answer: A) True. 11. What is the main problem with deflation? A) Increased consumer spending. B) Negative impact on borrowing and spending. C) Rising asset values. D) Stable national income. Show Answer Correct Answer: B) Negative impact on borrowing and spending. 12. This occurred in Germany in the 1920s and in the Philippines during Japanese occupation when the price is continuously increasing and large amount of money were needed to buy a very minimal amount of commodities A) Inflation. B) Deflation. C) Hyperinflation. D) Structural Inflation. Show Answer Correct Answer: C) Hyperinflation. 13. Combination of relatively high inflation and a very weak economy. US experienced it during the 1973-75 & '80 recessions. A) Stagflation. B) Hyperinflation. C) Deflation. D) Disinflation. Show Answer Correct Answer: A) Stagflation. 14. What happens to investment during inflation? A) Inflation causes the value of money to remain the same. B) Inflation can negatively impact the returns on investments. C) Investment increases during inflation. D) Inflation has no impact on investments. Show Answer Correct Answer: B) Inflation can negatively impact the returns on investments. 15. If workers do not believe that policymakers are serious about fighting inflation, they are most likely to push for higher wages, which will shift the aggregate ..... curve ..... and lead to unemployment or inflation or both. A) Demand; inward. B) Demand; outward. C) Supply; inward. D) Supply; outward. Show Answer Correct Answer: C) Supply; inward. 16. The producer price index (PPI): A) Measures the cost of a representative basket of goods and services to the consumers. B) Includes the cost of manufactured goods to the consumers. C) Includes the cost of capital and intermediate goods. D) Excludes the price of imported goods. Show Answer Correct Answer: C) Includes the cost of capital and intermediate goods. 17. When the general level of prices rises, the economy is experiencing A) Construction. B) Deflation. C) Stagflation. D) Inflation. Show Answer Correct Answer: D) Inflation. 18. What is the biggest problem with this statement?"I will be getting a pension of $ 1500 a month. This is enough to cover my expenses now, so I will be Ok for the rest of my life" A) It does not account for inflation. B) This person might lose their pension. C) This person should be saving their money. D) None of above. Show Answer Correct Answer: A) It does not account for inflation. 19. In India ..... is considered as the appropriate indicator of Inflation A) CPI. B) WPI. C) GDP. D) None of above. Show Answer Correct Answer: B) WPI. 20. Which of the following explains the relations between the average price of aggregate supply and the quantity demanded? A) Aggregate demand. B) Price level. C) Producer price index. D) Consumer price index. Show Answer Correct Answer: A) Aggregate demand. ← 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