This quiz works best with JavaScript enabled. Home > Economics > Macroeconomics > Inflation And Deflation > Inflation And Deflation – Quiz 14 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Inflation And Deflation Quiz 14 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Which is the following is included in GDP? A) An intermediate good. B) A service produced and used in another country. C) A fish that you catch and eat yourself. D) A fish that you buy at a store. Show Answer Correct Answer: D) A fish that you buy at a store. 2. "The ..... is often used to adjust consumers' income payments (for example, Social Security), to adjust income eligibility levels for government assistance, and to automatically provide cost-of-living wage adjustments to millions of American workers. As a result of statutory action, the ..... affects the income of millions of Americans. Over 50 million Social Security beneficiaries, and military and Federal Civil Service retirees, have cost-of-living adjustments tied to the ..... " (BLS). A) Gallup Economic Survey (GES). B) Consumer Price Index (CPI). C) Personal Consumption Expenditures Price Index (PCE). D) Current Population Survey (CPS). Show Answer Correct Answer: B) Consumer Price Index (CPI). 3. Which is an effect of inflation on the government? A) Real GDP is higher. B) Increases confidence in the government. C) Real GDP is lower. D) Decreases nominal costs. Show Answer Correct Answer: C) Real GDP is lower. 4. If MV = PQ, then V =? A) PQ/M. B) M/PQ. Show Answer Correct Answer: A) PQ/M. 5. Business spending on physical capital, new homes, and inventories is counted in which component of GDP? A) Consumption. B) Investment. C) Imports-exports. D) Government spending. Show Answer Correct Answer: B) Investment. 6. What is magma? A) Pieces of the Earth's crust. B) Molten rock inside of a volcano. C) Small rock. D) Plates that meet. Show Answer Correct Answer: B) Molten rock inside of a volcano. 7. If the CPI rises from 250 to 275 in a given year, the rate of inflations is: A) 10%. B) 9.1%. C) 25%. D) 20%. Show Answer Correct Answer: A) 10%. 8. Who did President Ebert select as a new Chancellor in 1923 to solve the problem of the hyper-inflation? A) From Papen. B) Gustav Stresemann. C) Adolf Hitler. D) Chancellor Bruning. Show Answer Correct Answer: B) Gustav Stresemann. 9. The group of goods and services selected and used to measure inflation is referred to as a A) Big Basket. B) Market Basket. C) Inflation basket. D) None of above. Show Answer Correct Answer: B) Market Basket. 10. Which of the following is not a step in calculating the CPI? A) Choose a base year and let it equal 100. B) Decide what goods to put in the basket. C) Multiply the simple price index by the weight. D) Calculate how many people bought the good this year. Show Answer Correct Answer: D) Calculate how many people bought the good this year. 11. Which of the following interest rates is expressed in terms of current dollars as the percentage of the amount loaned? A) Simple interest rate. B) Nominal interest rate. C) Real interest rate. D) Compound interest rate. Show Answer Correct Answer: B) Nominal interest rate. 12. What happens to investment during deflation? A) Deflation causes the value of money to remain the same. B) Lower interest rates and increased purchasing power. C) Investment decreases during deflation. D) Deflation has no impact on investments. Show Answer Correct Answer: B) Lower interest rates and increased purchasing power. 13. High inflation is good for the economy. A) True. B) False. Show Answer Correct Answer: B) False. 14. What is a cause of demand-pull inflation? A) Reduction on business investments. B) Rise in import spending. C) Fall in aggregate demand. D) Rise in consumer spending. Show Answer Correct Answer: D) Rise in consumer spending. 15. What is it called when magma pressurizes and fills a magma chamber? A) Inflation. B) Subduction. C) Eruption. D) Collision. Show Answer Correct Answer: A) Inflation. 16. In which year did the French occupy (take over) the area of the Ruhr? A) 1920. B) 1921. C) 1922. D) 1923. Show Answer Correct Answer: D) 1923. 17. What is the purpose of the Consumer Price Index (CPI)? A) The purpose of the Consumer Price Index (CPI) is to measure changes in the population growth rate over time. B) The purpose of the Consumer Price Index (CPI) is to measure changes in the average price level of goods and services purchased by households over time. C) The purpose of the Consumer Price Index (CPI) is to measure changes in the average wage level of workers over time. D) The purpose of the Consumer Price Index (CPI) is to measure changes in the stock market index over time. Show Answer Correct Answer: B) The purpose of the Consumer Price Index (CPI) is to measure changes in the average price level of goods and services purchased by households over time. 18. What are the three ways governments can contral inflation? A) Monetary Policy, Fiscal Policy, Exchange Rates. B) Fiscal Policy, Supply and Demand. C) Monetary Policy, Supply and Demand. D) None of above. Show Answer Correct Answer: A) Monetary Policy, Fiscal Policy, Exchange Rates. 19. What is a countermeasure to combat deflation? A) Interest rate increase. B) Interest rate cut. C) Keep interest rates at the same level. D) Close the borders to neighboring countries. Show Answer Correct Answer: B) Interest rate cut. 20. What is the effect of inflation on investment returns? A) Inflation has no effect on investment returns. B) Inflation increases the real value of investment returns. C) Inflation only affects short-term investment returns. D) Inflation reduces the real value of investment returns, leading to lower purchasing power. Show Answer Correct Answer: D) Inflation reduces the real value of investment returns, leading to lower purchasing power. ← 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