This quiz works best with JavaScript enabled. Home > Economics > Macroeconomics > Inflation And Deflation > Inflation And Deflation – Quiz 22 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Inflation And Deflation Quiz 22 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. The purchasing power of your income is called your A) Real income. B) Nominal income. Show Answer Correct Answer: A) Real income. 2. Rising prices resulting from a high level of aggregate demand relative to potential output A) Demand Pull. B) Cost Push. Show Answer Correct Answer: A) Demand Pull. 3. During a recession, inflation is likely to be ..... A) High. B) Low. Show Answer Correct Answer: B) Low. 4. How does inflation impact fixed-income earners? A) Inflation increases the value of fixed-income for earners. B) Inflation has no impact on fixed-income earners. C) Inflation only impacts variable-income earners. D) Inflation erodes the purchasing power of fixed-income earners. Show Answer Correct Answer: D) Inflation erodes the purchasing power of fixed-income earners. 5. This group of people benefit from inflation: A) Lenders. B) Savers. C) Borrowers. D) None of above. Show Answer Correct Answer: C) Borrowers. 6. What is most likely to cause a fall in the rate of inflation? A) An increase in consumer spending. B) An increase in import prices. C) An increase in income tax. D) An increase in wage rates. Show Answer Correct Answer: C) An increase in income tax. 7. Who is most likely to benefit during a period of inflation? A) Creditors (lenders). B) Debtors (borrowers). C) Fixed income earners. D) Holders of cash. Show Answer Correct Answer: B) Debtors (borrowers). 8. Combination of slow growth and fast-rising prices A) Hyperinflation. B) Demand pull. C) Cost plus. D) Stagflation. Show Answer Correct Answer: D) Stagflation. 9. Which post WWII US President used a temporary freeze on wages and prices to control inflation and stabilize the dollar? A) President Clinton. B) President Eisenhower. C) President Nixon. D) President Kennedy. Show Answer Correct Answer: C) President Nixon. 10. In the U.S., inflation occurs A) Rarely. B) Occasionally. C) Often. D) None of above. Show Answer Correct Answer: C) Often. 11. What happens to purchasing power as inflation increases? A) Increases. B) Decreases. C) Remains the same. D) None of above. Show Answer Correct Answer: B) Decreases. 12. Which of the following is NOT a limitation of the CPI? A) Consumers changing their consumption patterns due to changing prices. B) Comparisons over long periods of time (more than 10 years) are difficult. C) Consumers tend to be loyal to particular products so their consumption patterns will not really change. D) Not all consumers will consume what is in the 'typical' basket of goods and services. Show Answer Correct Answer: C) Consumers tend to be loyal to particular products so their consumption patterns will not really change. 13. What are some factors that can influence the CPI? A) Currency exchange rates, stock market fluctuations, interest rates. B) Consumer preferences, advertising strategies, social media influence. C) Changes in weather conditions, technological advancements, population growth. D) Changes in prices, consumer spending patterns, government policies, cost of production, and competition. Show Answer Correct Answer: D) Changes in prices, consumer spending patterns, government policies, cost of production, and competition. 14. A decrease of inflation rates is called A) Deflation. B) Disinflation. Show Answer Correct Answer: B) Disinflation. 15. Which of the following is TRUE of the CPI? A) The CPI is the unweighted average of all price changes in an economy. B) The CPI is a modal average. C) The CPI is a weighted average of a typical basket of goods and services from urban consumers. D) The CPI is based on the average spending patterns of rural consumers. Show Answer Correct Answer: C) The CPI is a weighted average of a typical basket of goods and services from urban consumers. 16. What is a supply shock? A) A sudden increase in the availability of productive resources. B) A decrease in production costs. C) A sudden decrease in the availability of an important resource. D) An increase in consumer spending. Show Answer Correct Answer: C) A sudden decrease in the availability of an important resource. 17. When the economy is at full-employment, changes in the money supply have ..... effect on real output in the long-run A) A positive. B) A negative. C) No. D) None of above. Show Answer Correct Answer: C) No. 18. A government wishes to stimulate economic recovery. Which action will assist this? A) Decreasing government investment. B) Decreasing income tax. C) Increasing indirect taxation. D) Increasing interest rates. Show Answer Correct Answer: B) Decreasing income tax. 19. How many Harry Potter movies are there? A) 5. B) 9. C) 8. D) 7. Show Answer Correct Answer: C) 8. 20. Which is NOT one of the top 3 categories of items in the basket of goods used to calculate CPI? A) Housing. B) Transportation. C) Food & Beverages. D) Communication. Show Answer Correct Answer: D) Communication. ← 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