This quiz works best with JavaScript enabled. Home > Economics > Macroeconomics > Inflation And Deflation > Inflation And Deflation – Quiz 8 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Inflation And Deflation Quiz 8 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Which is NOT a limitation of CPI? A) Used to measure the rate of inflation. B) Spending patterns of different households. C) Changing quality of goods and services. D) New products and time lag. Show Answer Correct Answer: A) Used to measure the rate of inflation. 2. Weighting is used in the CPI to represent different family sizes A) True. B) False. Show Answer Correct Answer: B) False. 3. Savers are loser of inflation because A) Fixed pension or interest income from investments your income will not grow with inflation. B) The inflation rate is lower than the interest rate, savings are decreasing in value. C) The inflation rate is higher than the interest rate, savings are decreasing in value. D) None of above. Show Answer Correct Answer: C) The inflation rate is higher than the interest rate, savings are decreasing in value. 4. The main reason why the price of goods and services increase overtime is because of A) Government controls. B) Inflation. C) Deflation. D) None of above. Show Answer Correct Answer: B) Inflation. 5. However, long run, persistent inflation is caused by (a) the money supply. A) A increasing. B) Decreasing. Show Answer Correct Answer: A) A increasing. 6. There are two tools of Fiscal Policy, which are A) Cash rate and Reserve Requirements. B) Open Market Operations and Tax. C) Government spending and Reserve Requirements. D) Tax and Government Spending. Show Answer Correct Answer: D) Tax and Government Spending. 7. ..... When a government prints lots of money, people have more money to bid up prices which causes inflation. Economists refer to this as "too much money chasing too few goods." A) True. B) False. Show Answer Correct Answer: A) True. 8. Over the long term, low level inflation is barely noticeable. A) True. B) False. Show Answer Correct Answer: B) False. 9. Money supply creates inflation only when ..... A) The money is printed slower than the economy grows. B) The money is printed faster than the economy grows. C) The money is printed at the same speed than the economy grows. D) None of above. Show Answer Correct Answer: B) The money is printed faster than the economy grows. 10. What may affect the impact of inflation in the economy? A) The bargaining power of workers-trade unions. B) The ONS. C) The cost of borrowing. D) Boris Johnson's suit. Show Answer Correct Answer: A) The bargaining power of workers-trade unions. 11. Which of the following is NOT one of the constants the aggregate supply curve assumes? A) State of technology. B) Resource prices. C) Rules providing production incentives. D) Rate of production. Show Answer Correct Answer: D) Rate of production. 12. Which of the following is not an advantage of Inflation? A) It encourages consumption. B) It reduces the value of debt. C) It allows struggling firms to raise prices. D) It raises the price of Exports. Show Answer Correct Answer: D) It raises the price of Exports. 13. Which cause of inflation occurs when excessive growth in demand in the economy results in shortages and firms raise prices? A) Cost-push inflation. B) Demand-pull inflation. C) Price-push inflation. D) Supply-pull inflation. E) None of the answers. Show Answer Correct Answer: B) Demand-pull inflation. 14. How is inflation measured using the CPI? A) By tracking the prices of a basket of goods and services commonly purchased by households. B) By tracking the prices of goods and services in only one region or city. C) By tracking the prices of luxury goods and services. D) By tracking the prices of goods and services commonly purchased by businesses. Show Answer Correct Answer: A) By tracking the prices of a basket of goods and services commonly purchased by households. 15. What are the main causes of inflation? A) Increase in money demand, demand-pull deflation, cost-push deflation, and deflation expectations. B) Increase in money supply, demand-pull inflation, cost-push inflation, and inflation expectations. C) Decrease in money supply, deflation expectations, demand-pull deflation, and cost-push deflation. D) Decrease in money demand, demand-pull deflation, cost-push deflation, and deflation expectations. Show Answer Correct Answer: B) Increase in money supply, demand-pull inflation, cost-push inflation, and inflation expectations. 16. How does inflation affect purchasing power? A) Purchasing power increases. B) Purchasing power decreases. Show Answer Correct Answer: B) Purchasing power decreases. 17. When a farm worker loses his job after the harvest, it is an example of A) Frictional unemployment. B) Seasonal unemployment. C) Structural unemployment. D) Cyclical unemployment. Show Answer Correct Answer: B) Seasonal unemployment. 18. It is the continuing increase in the general price level of commodities A) Inflation. B) HyperInflation. C) Cost-push. D) Demand-pull. Show Answer Correct Answer: A) Inflation. 19. What is the role of the central bank in controlling inflation? A) The central bank controls inflation through monetary policy measures. B) The central bank controls inflation through supply and demand. C) The central bank controls inflation through fiscal policy measures. D) The central bank has no role in controlling inflation. Show Answer Correct Answer: A) The central bank controls inflation through monetary policy measures. 20. What causes demand-pull inflation? A) A decrease in consumer spending. B) Too much money chasing too few goods. C) A decrease in the availability of productive resources. D) An increase in production costs. Show Answer Correct Answer: B) Too much money chasing too few goods. ← 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 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books