This quiz works best with JavaScript enabled. Home > Economics > Macroeconomics > Inflation And Deflation > Inflation And Deflation – Quiz 18 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Inflation And Deflation Quiz 18 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. You loaned a friend $ 100 for a year. You are charging her 5% interest. The inflation rate over the year was 2%. You real rate of interest was:(a) A) A 3%. B) 5%. C) 2%. D) -2%. Show Answer Correct Answer: A) A 3%. 2. You can represent demand-pull inflation in a diagram through ..... A) An inward shift of SRAS. B) An outward shift of AD. C) An outward shift of SRAS. D) An inward shift of AD. Show Answer Correct Answer: B) An outward shift of AD. 3. All sectors in the economy try to buy more goods and services than the economy can produce. The result is A) Cost-push inflation. B) Hyperinflation. C) Demand-pull inflation. D) Inflation. Show Answer Correct Answer: C) Demand-pull inflation. 4. Which of the following is used to measure inflation? A) Consumer price index (CPI). B) Human development index (HDI). C) Real GDP per head. D) Basket of goods. Show Answer Correct Answer: A) Consumer price index (CPI). 5. What is the definition of deflation? A) A period when the general price level of goods and services falls. B) A sustained increase in the general price level of goods and services in an economy over a period of time. C) A slowdown in the rate of increase of the general price level of goods and services in a nation's gross domestic product over time. D) An inflationary period accompanied by rising unemployment and lack of growth in consumer demand and business activity. Show Answer Correct Answer: A) A period when the general price level of goods and services falls. 6. Inflation is the sustained increase in the price of a product A) True. B) False. Show Answer Correct Answer: B) False. 7. The two main types of inflation are demand-pull and cost-push. A) True. B) False. Show Answer Correct Answer: A) True. 8. How does inflation impact unemployment? A) Inflation can lead to higher unemployment. B) Inflation causes unemployment to decrease as businesses reduce production costs. C) Inflation has no impact on unemployment. D) Inflation leads to lower unemployment by increasing consumer spending. Show Answer Correct Answer: A) Inflation can lead to higher unemployment. 9. What is demand pull inflation? A) A decrease in price due to a decrease in supply. B) A rise in price level due to an increase in demand. C) A decrease in price due to an increase in supply. D) None of above. Show Answer Correct Answer: B) A rise in price level due to an increase in demand. 10. As money is neutral in the long run, an increase in the money supply can lead to which event in ONLY the short run? A) A decrease in real output GDP. B) An increase in real output GDP. C) A run on banks, as they have too much money. D) A run on banks, as they have too little money. Show Answer Correct Answer: B) An increase in real output GDP. 11. What is the initial cost to own a Chick-Fil-A franchise A) $ 10, 000. B) $ 20, 000. C) $ 30, 000. D) None of above. Show Answer Correct Answer: A) $ 10, 000. 12. When production costs lead to increases in the general price level, this is known as ..... A) Demand-pull inflation. B) Cost-push inflation. Show Answer Correct Answer: B) Cost-push inflation. 13. Which of the following is true about hyperinflation? A) Hyperinflation harms the richest members of a country the most. B) If anticipated, hyperinflation doesn't have a detrimental effect on economic activity. C) Hyperinflation boosts the value of long term savings. D) Hyperinflation decreases the purchasing power of money. Show Answer Correct Answer: D) Hyperinflation decreases the purchasing power of money. 14. Which one of the following statements is correct? A) Inflation targeting is based on the assumption that all elements of the inflation process are under control of the central bank. B) Under an inflation-targeting framework there is no limit to the discretionary powers of the central bank. C) Inflation targeting will only work if there is a strong and stable relationship between changes in the money stock and inflation. D) One of the key aspects of inflation targeting is the impact on inflation expectations. Show Answer Correct Answer: D) One of the key aspects of inflation targeting is the impact on inflation expectations. 15. Jeanna is stoked that the value of her S&P 500 Index Fund increased by 8% last year. The rate of inflation is 6%. What is Jeanna's REAL rate of return on her investment? (a) A) A 2%. B) 4%. C) 8%. D) 10%. Show Answer Correct Answer: A) A 2%. 16. Sally Student ..... owes lots of money on her credit cards. A) Hurt by inflation. B) Helped by inflation. Show Answer Correct Answer: B) Helped by inflation. 17. In ..... Inflation prices rise very fast at double or triple rate. A) Walking. B) Running. C) Hyper. D) Creeping. Show Answer Correct Answer: C) Hyper. 18. What would most governments consider an acceptable rate of inflation? A) 0-1%. B) 1-2%. C) 2-3%. D) 3-4%. Show Answer Correct Answer: C) 2-3%. 19. Tax that is flat or fixed for individuals A) Regressive tax. B) Proportional tax. C) Lending tax. D) Income tax. Show Answer Correct Answer: B) Proportional tax. 20. What is the real cost of borrowing if prices fall by 2% and the nominal interest rate is 1%? A) 1%. B) 4%. C) 2%. D) 3%. Show Answer Correct Answer: D) 3%. ← 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