This quiz works best with JavaScript enabled. Home > Economics > Macroeconomics > Inflation And Deflation > Inflation And Deflation – Quiz 24 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Inflation And Deflation Quiz 24 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. In the long run, inflation is caused by A) Governments that raise taxes so high that it increases the cost of doing business and, hence, raises prices. B) Banks that have market power and refuse to lend money. C) None of these answers. D) Governments that print too much money. E) Increases in the price of inputs, such as labour and oil. Show Answer Correct Answer: D) Governments that print too much money. 2. Who, among the following, is most likely to benefit during a period of rapid inflation? A) Borrowers. B) Pensioners. C) Savers. D) Workers in strong unions. Show Answer Correct Answer: A) Borrowers. 3. Which of the following is likely to cause supply-side deflation? A) Lower direct taxes. B) Higher taxes. C) A sudden drop in commodity prices. D) Higher wages. Show Answer Correct Answer: C) A sudden drop in commodity prices. 4. Which policy mix is most likely to be effective in the short run for reducing inflation in a closed economy? D A) Decreasing the budget surplus (fiscal), increasing the interest rate (monetary). B) Decreasing the budget surplus (fiscal), increasing the money supply (monetary). C) Increasing the budget surplus (fiscal), increasing the interest rate (monetary). D) Increasing the budget surplus (fiscal), increasing the money supply (monetary) tagsInflation, Deflation, Disinflation. Show Answer Correct Answer: C) Increasing the budget surplus (fiscal), increasing the interest rate (monetary). 5. A representative selection of commonly purchased goods and services used by consumers is called the A) Producer price index (PPI). B) Base Year. C) Inflation. D) Market basket. Show Answer Correct Answer: D) Market basket. 6. True or false? The economy benefits from an inflation rate which is at 0. A) True. B) False. Show Answer Correct Answer: B) False. 7. Which of the following types of inflation interferes with a company's ability to plan for the future? A) Expected inflation. B) Unexpected inflation. C) Creeping inflation. D) Galloping inflation. Show Answer Correct Answer: B) Unexpected inflation. 8. What is the second stage when calculating the price level in the UK? A) Office of National Statistics conducts a price survey to find the maximum price of the 650 most common goods and services. B) Organisation of National Statistics conducts a price survey to find the average price of the 650 most common goods and services. C) Office of National Statistics conducts a price survey to find the average price of the 7000 most common goods and services. D) Office of National Statistics conducts a price survey to find the average price of the 650 most common goods and services. Show Answer Correct Answer: D) Office of National Statistics conducts a price survey to find the average price of the 650 most common goods and services. 9. Who benefits most from deflation? A) Trainees and students. B) Property owner. C) Savings. D) Residents of the capital Berlin. Show Answer Correct Answer: C) Savings. 10. ..... is when prices rise and are pushed up because the cost of resources and labor increases. A) Deflation. B) Cost-Push Inflation. C) Market Basket. D) Fixed Income. Show Answer Correct Answer: B) Cost-Push Inflation. 11. A situation of rising prices resulting from increases in the cost of production. A) Consumer Price Index. B) Cost-push Inflation. C) Demand-pull inflation. D) None of above. Show Answer Correct Answer: B) Cost-push Inflation. 12. What is the true measure of wealth? A) How much money you have. B) How many resources you have, like land. C) How much purchasing power you have. D) How much you are able to borrow. Show Answer Correct Answer: C) How much purchasing power you have. 13. In which year did the French army take over the German Ruhr coalfields? A) 1920. B) 1923. C) 1925. D) 1927. Show Answer Correct Answer: B) 1923. 14. In the long-run, the growth rate of money supply determines the growth rate of the ..... according to the quantity theory of money A) Price level (inflation). B) RGDP. C) Nominal interest rate. D) Real interest rate. Show Answer Correct Answer: A) Price level (inflation). 15. Which option would not cause demand-pull inflation? A) Higher interest rates to make borrowing more difficult. B) Higher level of consumer and producer confidence in the economy. C) Increase in government spending. D) Reduction in direct taxes. Show Answer Correct Answer: A) Higher interest rates to make borrowing more difficult. 16. What is lava? A) Molten rocks inside a volcano. B) Molten rock outside a volcano. C) Small rocks. D) Magma. Show Answer Correct Answer: B) Molten rock outside a volcano. 17. More people working from home causes many people to buy desks and shelving, leading furniture stores to increase prices. A) Cost Push Inflation. B) Demand Pull Inflation. Show Answer Correct Answer: B) Demand Pull Inflation. 18. True or false? The consumer price index measures the price of a basket of food stuffs every year. A) True. B) False. Show Answer Correct Answer: B) False. 19. If the nominal interest rate is 6 per cent and the inflation rate is 3 per cent, the real interest rate is A) 3 percent. B) 6 percent. C) 9 percent. D) 18 percent. Show Answer Correct Answer: A) 3 percent. 20. Which year is the base year? 1997 CPI = 95 1998 CPI = 97 1999 CPI = 100 2000 CPI = 104 A) 1997. B) 1998. C) 1999. D) 2000. Show Answer Correct Answer: C) 1999. ← 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