This quiz works best with JavaScript enabled. Home > Economics > Macroeconomics > Inflation And Deflation > Inflation And Deflation – Quiz 23 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Inflation And Deflation Quiz 23 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Extremely rapid inflation with the price level rising by at least fifty per cent each month A) Hyperinflation. B) Stagnation. C) Deflation. D) Inflation. Show Answer Correct Answer: A) Hyperinflation. 2. What type of inflation is caused when banks print more money? A) Bankflation. B) Monetary inflation. C) Hyperinflation. D) Increase in the money supply. Show Answer Correct Answer: B) Monetary inflation. 3. An example of a real variable is A) The wage rate in euros. B) None of these answers are real variables. C) The price of corn. D) The nominal interest rate. E) The ratio of the value of wages to the price of soda. Show Answer Correct Answer: E) The ratio of the value of wages to the price of soda. 4. By comparing the price change of a market basket of goods and services over time, we can determine the rate of inflation or deflation. A) True. B) False. Show Answer Correct Answer: A) True. 5. The Consumer Price Index (CPI) is best used to determine A) The Dow Jones Index. B) The rate of inflation. C) The unemployment rate. D) Currency exchange rates. Show Answer Correct Answer: B) The rate of inflation. 6. ..... High interest rates tend to encourage consumers to buy goods that are often bought with credit such as cars, houses, and other expensive items. A) True. B) False. Show Answer Correct Answer: B) False. 7. What is the main cause of falling prices in Japan between 1995 and 2014? A) Low demand. B) Global commodity prices. C) High demand. D) Government intervention. Show Answer Correct Answer: A) Low demand. 8. Maintaining inflation rates at 2% or below is known as ..... A) Inflation stability. B) Savings rate. C) Price stability. D) Market forces. E) Market economy. Show Answer Correct Answer: C) Price stability. 9. The prices of gold, platinum, fine art and yachts are examples of prices used as leading indicators of inflation, since people hold onto them when they expect overall price levels to rise. A) True. B) False. Show Answer Correct Answer: A) True. 10. Where does the word "inflation" come from? A) From the Latin "to swell", "to inflate". B) From the Latin "lustris". C) From the Latin "mandacure". D) Von dem bambergerischen "beer". Show Answer Correct Answer: A) From the Latin "to swell", "to inflate". 11. The quantity theory of money concludes that an increase in the money supply causes A) A proportional increase in prices. B) A proportional increase in real output. C) A proportional decrease in velocity. D) A proportional increase in velocity. E) A proportional decrease in prices. Show Answer Correct Answer: A) A proportional increase in prices. 12. Whom does inflation hurt the most? A) Producers. B) Creditors. C) Consumers. D) Debtors. Show Answer Correct Answer: B) Creditors. 13. ..... is income that doesn't change. A) Cost-Push Inflation. B) Demand-Pull Inflation. C) Fix Income. D) Market Basket. Show Answer Correct Answer: C) Fix Income. 14. How does inflation affect the purchasing power of money? A) It decreases the purchasing power of money. B) It increases the purchasing power of money. C) It has no effect on the purchasing power of money. D) It fluctuates the purchasing power of money. Show Answer Correct Answer: A) It decreases the purchasing power of money. 15. Real GDP A) Distorts the price level in the GDP. B) Expresses GDP in constant prices. C) Measures only intermediate goods. D) Is another term for GNP. Show Answer Correct Answer: B) Expresses GDP in constant prices. 16. An increase in aggregate demand may not always lead to demand-pull inflation in A) A monetarist new classical model. B) The Keynesian model. C) The short run. D) The long run. Show Answer Correct Answer: B) The Keynesian model. 17. The ..... measures the price change of a selected group of consumer goods and services overtime A) Consumer Price Index (CPI). B) Bureau of Labor Statistics. C) Gross National Product. D) None of above. Show Answer Correct Answer: A) Consumer Price Index (CPI). 18. Which of the following is NOT a consequence of inflation? A) Low menu costs. B) High levels of uncertainty. C) A false sense of the value of money. D) Reduced export competitiveness. Show Answer Correct Answer: A) Low menu costs. 19. What is an effect of inflation on firms? A) Increases value of debt. B) Cost of borrowing decreases. C) Decreasing labour costs. D) Business uncertainty. Show Answer Correct Answer: D) Business uncertainty. 20. What is the Consumer Price Index (CPI) used for? A) To calculate the rate of inflation. B) To determine the highest grossing movies of all time. C) To adjust prices from the past into today's dollars. D) To measure the overall price levels in a country. Show Answer Correct Answer: A) To calculate the rate of inflation. ← 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