This quiz works best with JavaScript enabled. Home > Economics > Macroeconomics > Inflation And Deflation > Inflation And Deflation – Quiz 2 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Inflation And Deflation Quiz 2 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. The difference between GDP deflator and CPI is that: A) The GDP deflator reflects the prices of goods and services produced domestically, whereas the consumer price index reflects the prices of goods and services produced abroad. B) The GDP deflator reflects the prices of all final goods and services produced domestically, whereas the consumer price index reflects the prices of goods and services bought by a typical consumer. C) The GDP deflator reflects the prices of goods and services bought by producers, whereas the consumer price index reflects the prices of goods and services bought by consumers. D) None of the above. Show Answer Correct Answer: B) The GDP deflator reflects the prices of all final goods and services produced domestically, whereas the consumer price index reflects the prices of goods and services bought by a typical consumer. 2. How does inflation impact interest rates? A) Inflation has no impact on interest rates. B) Inflation causes interest rates to decrease. C) Inflation causes interest rates to remain constant. D) Inflation causes interest rates to rise. Show Answer Correct Answer: D) Inflation causes interest rates to rise. 3. Which of the following is not a policy used to control deflation? A) Expansionary monetary policy. B) Supply-side policy. C) Expansionary fiscal policy. D) Quantitative easing. Show Answer Correct Answer: B) Supply-side policy. 4. If the rate of inflation is higher than interest rates, real interest rates are said to be ..... A) Positive. B) Negative. Show Answer Correct Answer: B) Negative. 5. Which is a general cost of inflation? A) Certainty in the market. B) Potential fall in real income. C) Increase in competitiveness. D) Increase in real savings. Show Answer Correct Answer: B) Potential fall in real income. 6. In general, what happens to money that you have saved in a jar in your closet for 20 years? A) I will be able to buy more with it than I could when I saved it. B) I will be able to buy less with it than I could when I saved it. C) It's the same amount of money so I will be able to buy the same with it than when I saved it. D) None of above. Show Answer Correct Answer: B) I will be able to buy less with it than I could when I saved it. 7. When cost-push inflation occurs what happens to the SRAS curve in the classical model? A) It shifts to the left. B) It doesn't change. C) It shifts to the right. D) None of above. Show Answer Correct Answer: A) It shifts to the left. 8. An inflation tax A) Is usually employed by governments with balanced budgets. B) Is a tax on people who hold money. C) Is an explicit tax paid quarterly by businesses based on the amount of increase in the prices of their products. D) Is a tax borne only by people who hold interest bearing savings accounts. E) None of these answers. Show Answer Correct Answer: B) Is a tax on people who hold money. 9. ..... type of Inflation is a warning signal to the Government to control it. A) Creeping. B) Running. C) Trotting. D) Hyper. Show Answer Correct Answer: C) Trotting. 10. In January 2015 the price level index was 99 and in August 2017 it was 104. Calculate the inflation rate from January 2015 to August 2017 to 2 decimal places. A) -5.05%. B) 5.05%. C) 5.00%. D) -4.8%. Show Answer Correct Answer: B) 5.05%. 11. In the long-run, which variable is independent of MV? A) Real GDP (P). B) Nominal GDP. C) Price Level. D) None of above. Show Answer Correct Answer: A) Real GDP (P). 12. Inflation caused by an increase in consumption would be classified as ..... A) Demand pull. B) Demand push. C) Cost push. D) Cost pull. Show Answer Correct Answer: A) Demand pull. 13. ..... inflation is regarded as safe and essential for Economic Growth. A) Running. B) Creeping. C) Hyper. D) Walking. Show Answer Correct Answer: B) Creeping. 14. Inflation can be described as: A) An increase in the price of certain goods, such as oil or wheat. B) An increase in the purchasing power of power. C) A decrease in the price of certain goods, such as oil or wheat. D) A decrease in the purchasing power of money. Show Answer Correct Answer: D) A decrease in the purchasing power of money. 15. What is Disinflation? A) The amount one dollar can buy is reduced. B) Disinflation occurs when the price of goods and services rise. C) Decrease in the average price of goods and services. D) A decrease in the rates of inflation. Show Answer Correct Answer: D) A decrease in the rates of inflation. 16. Which of the following groups is likely to be better off in times of inflation? A) Pensioners. B) Savers. C) Borrowers. D) Lenders. Show Answer Correct Answer: C) Borrowers. 17. What is the term for increases in prices that economic actors are able to predict with accuracy? A) Hyperinflation. B) Unanticipated inflation. C) Disinflation. D) Anticipated inflation. Show Answer Correct Answer: D) Anticipated inflation. 18. ..... inflation affects the poor and middle class people adversely. A) Creeping. B) Walking. C) Running. D) Hyper. Show Answer Correct Answer: C) Running. 19. Which one of the following is not an essential feature of inflation targeting? A) The public announcement of quantitative inflation targets. B) The recognition that the primary aim of the central bank is to ensure rapid economic growth. C) A broad based approach to the analysis of inflation. D) A high degree of transparency. Show Answer Correct Answer: B) The recognition that the primary aim of the central bank is to ensure rapid economic growth. 20. Which of the following are policies are used to control deflation? A) Supply-side policy. B) Quantitative easing. C) Contractionary monetary policy. D) Contractionary fiscal policy. Show Answer Correct Answer: B) Quantitative easing. ← PreviousNext →Related QuizzesMacroeconomics QuizzesEconomics QuizzesInflation And Deflation Quiz 1Inflation And Deflation Quiz 3Inflation And Deflation Quiz 4Inflation And Deflation Quiz 5Inflation And Deflation Quiz 6Inflation And Deflation Quiz 7Inflation And Deflation Quiz 8Inflation And Deflation Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books