This quiz works best with JavaScript enabled. Home > Economics > Macroeconomics > Inflation And Deflation > Inflation And Deflation – Quiz 17 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Inflation And Deflation Quiz 17 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Which of the following would cause Demand Pull inflation A) An increase in the price of oil. B) A depreciation in the exchange rate. C) A cut in government spending. D) An Increase in taxation. Show Answer Correct Answer: B) A depreciation in the exchange rate. 2. How does inflation affect different sectors of the economy? A) Inflation only affects the financial sector of the economy. B) Inflation causes all sectors of the economy to collapse. C) Inflation affects different sectors of the economy in various ways. D) Inflation has no impact on different sectors of the economy. Show Answer Correct Answer: C) Inflation affects different sectors of the economy in various ways. 3. What happens to the value of savings during inflation? A) The value of savings fluctuates randomly during inflation. B) The value of savings decreases during inflation as the purchasing power of money decreases. C) The value of savings increases during inflation as the purchasing power of money increases. D) The value of savings remains the same during inflation. Show Answer Correct Answer: B) The value of savings decreases during inflation as the purchasing power of money decreases. 4. Which of the following describes demand-pull inflation A) The last stage before monetary collapse. B) The economy cannot produce quickly enough for all sectors, and shortages occur. C) A 1 to 3 percent rise in prices over the course of a year. D) Rising costs in energy which cause higher prices of products. Show Answer Correct Answer: B) The economy cannot produce quickly enough for all sectors, and shortages occur. 5. After Haiti's earthquake destroyed much of the productive capital in the nation, it also experienced massive inflation. The inflation was likely A) Cost-push Inflation. B) Demand-pull Inflation. Show Answer Correct Answer: A) Cost-push Inflation. 6. Name one cause of deflation. A) Increase in government spending. B) Decrease in overall demand. C) Increase in overall supply. D) Increase in overall demand. Show Answer Correct Answer: B) Decrease in overall demand. 7. In the U.S., deflation occurs A) Every ten years. B) Often. C) Rarely. D) Never. Show Answer Correct Answer: C) Rarely. 8. Prices of eggs and bacon have increased, forcing a local diner to increase their prices. A) Cost Push Inflation. B) Demand Pull Inflation. Show Answer Correct Answer: A) Cost Push Inflation. 9. Creeping inflation is typically considered bad for an economy? A) True. B) False. Show Answer Correct Answer: B) False. 10. In the long run, the demand for money is most dependent upon A) The level of prices. B) The interest rate. C) The availability of banking outlets. D) The availability of credit cards. Show Answer Correct Answer: A) The level of prices. 11. Name one cause of inflation. A) Increase in the supply of money in circulation. B) Decrease in the cost of production. C) Increase in the demand for goods and services. D) Decrease in the supply of money in circulation. Show Answer Correct Answer: A) Increase in the supply of money in circulation. 12. Inflation that is out of control A) Consumer Price Index. B) Inflation rate. C) Hyperinflation. D) Quantity theory. E) Wage-price spiral. Show Answer Correct Answer: C) Hyperinflation. 13. What is a claimant count? A) The number of people claiming unemployment benefit. B) The number of adults of working age without a job. C) The number of people in employment. D) The number of retired people. Show Answer Correct Answer: A) The number of people claiming unemployment benefit. 14. Discourages spending and investment because consumers, expecting prices to fall further, delay purchases. A) Deflation. B) Disinflation. C) Inflation. D) None of above. Show Answer Correct Answer: A) Deflation. 15. In the long run, an increase in the money supply tends to have an effect on real variables but no effect on nominal variables. A) True. B) False. Show Answer Correct Answer: B) False. 16. Which country has been experiencing deflation? A) China. B) Venezuela. C) Japan. D) United States. Show Answer Correct Answer: C) Japan. 17. The lowest point in the business cycle is A) Peak. B) Boom. C) Trough. D) Recession. Show Answer Correct Answer: C) Trough. 18. Assuming that income velocity is contant, and that the RGDP is growing at an annual rate of 3%, what would happen if the M1 grew by 5% during the same year? A) P increases 5/3. B) P increases 2% . Show Answer Correct Answer: A) P increases 5/3. 19. Which among the following is exact opposite of inflation? A) Stagflation. B) Disinflation. C) Hyperinflation. D) Deflation. Show Answer Correct Answer: D) Deflation. 20. If the money supply grows 5 per cent, and real output grows 2 per cent, prices should rise by A) 5 per cent. B) More than 5 per cent. C) Less than 5 per cent. D) None of these answers. Show Answer Correct Answer: C) Less than 5 per cent. ← 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