This quiz works best with JavaScript enabled. Home > Finance > Economics > Macroeconomics > Inflation And Deflation > Inflation And Deflation – Quiz 1 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Inflation And Deflation Quiz 1 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Which statement best describes Germany's economy by 1923? A) Further in debt. B) Making profit. C) Okay. D) Doing well. Show Answer Correct Answer: A) Further in debt. 2. Why is it important to take a weighted average of the items in the basket of goods and services when calculating the inflation rate? A) To ensure all items are equally represented. B) To ensure a large price increase in commonly bought goods is ignored. C) To ensure a price increase for commonly purchased goods is given more importance. D) To ensure the inflation rate is as low as possible. Show Answer Correct Answer: C) To ensure a price increase for commonly purchased goods is given more importance. 3. Market price and factor cost will be equal when there is A) No indirect tax. B) No subsidy. C) No direct tax. D) No indirect tax no subsidy. Show Answer Correct Answer: D) No indirect tax no subsidy. 4. Index number that represents general change in wholesale prices of commodities is ..... A) Consumer Price Index. B) Wholesale Price Index. C) Food Basket. D) None of above. Show Answer Correct Answer: B) Wholesale Price Index. 5. The inflation rate is measured by the ..... A) Consumer price index. B) Hyperinflation. C) Deflation rate. D) Purchasing power. E) Euribor rate. Show Answer Correct Answer: A) Consumer price index. 6. The UK's target rate of inflation is A) 2%. B) Less than 2%. C) 2%, unless Economic Growth needs to be targetted instead. D) Between 1 and 3%. Show Answer Correct Answer: D) Between 1 and 3%. 7. ..... means a celebrity or other well known person publicly supporting the product and appearing in its advertising A) Consumer. B) Property tax. C) Product endorsement. D) None of above. Show Answer Correct Answer: C) Product endorsement. 8. What did President Friedrich Ebert tell the workers in the Ruhr to do after the French invaded? A) Fight back using violence. B) Carry on working and ignore the French troops. C) He wanted passive resistance and strikes. D) None of above. Show Answer Correct Answer: C) He wanted passive resistance and strikes. 9. In the article about Venezuela, what did the government do to try and better living standards in the country? A) Print more money!. B) Lower interest rates. C) Increase the National Minimum Wage. D) Increase interest rates. Show Answer Correct Answer: C) Increase the National Minimum Wage. 10. After Haiti's earthquake destroyed much of the productive capital in the nation, it also experienced massive inflation. This inflation was likely A) Demand-pull. B) Cost-push. Show Answer Correct Answer: B) Cost-push. 11. The French occupation of the Ruhr led to what? A) Prices of food and goods in Germany decreasing-deflation. B) Prices of food and goods in Germany increasing-inflation. C) Prices of food and goods in Germany staying the same. D) None of above. Show Answer Correct Answer: B) Prices of food and goods in Germany increasing-inflation. 12. ..... During deflation there is too much of everything for sale, but not enough people who want or can afford to buy. A) False. B) True. Show Answer Correct Answer: B) True. 13. The Bureau of Labor Statistics measures inflation by using what is called A) Consumer Purchasing Program (CPP). B) Consumer Price Index (CPI). C) Fixed Income Index (FII). D) None of above. Show Answer Correct Answer: B) Consumer Price Index (CPI). 14. What did some people use to carry money during the hyperinflation of 1923? A) A wallet. B) A purse. C) A wheelbarrow. D) A motorbike. Show Answer Correct Answer: C) A wheelbarrow. 15. How did the German government fix the problems with hyperinflation? A) They made a new currency. B) They didn't do anything. C) They gave everyone more money. D) None of above. Show Answer Correct Answer: A) They made a new currency. 16. What is deflation? A) When the inflation level is slowing dow. B) When the price level rises very rapidly. C) A persistent decline in income. D) A persistent decline in the price of all things, including income. Show Answer Correct Answer: D) A persistent decline in the price of all things, including income. 17. The redistribution effects of a high rate of inflation may involve losses for ..... and gains for ..... A) Borrowers/lenders. B) Borrowers/savers. C) Savers/holders of cash. D) Lenders/borrows. Show Answer Correct Answer: D) Lenders/borrows. 18. This type of inflation is related with stagflation A) Creep inflation. B) Hyper inflation. C) Open inflation. D) Galloping inflation. Show Answer Correct Answer: D) Galloping inflation. 19. What is the definition of stagflation? A) A period when the general price level of goods and services falls. B) A sustained increase in the general price level of goods and services in an economy over a period of time. C) A slowdown in the rate of increase of the general price level of goods and services in a nation's gross domestic product over time. D) An inflationary period accompanied by rising unemployment and lack of growth in consumer demand and business activity. Show Answer Correct Answer: D) An inflationary period accompanied by rising unemployment and lack of growth in consumer demand and business activity. 20. Which of the following statements about inflation is true? A) An increase in the price of petrol always leads to inflation. B) Inflation can be measured using the Companies Price Index. C) Inflation leads to a fall in the real value of money. D) Inflation means the value of money increases. Show Answer Correct Answer: C) Inflation leads to a fall in the real value of money. 21. 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. 22. How does inflation impact interest rates? A) Inflation causes interest rates to remain constant. B) Inflation has no impact on interest rates. C) Inflation causes interest rates to rise. D) Inflation causes interest rates to decrease. Show Answer Correct Answer: C) Inflation causes interest rates to rise. 23. Which of the following is not a policy used to control deflation? A) Quantitative easing. B) Supply-side policy. C) Expansionary monetary policy. D) Expansionary fiscal policy. Show Answer Correct Answer: B) Supply-side policy. 24. 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. 25. 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. 26. 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. 27. 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. 28. 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. 29. ..... type of Inflation is a warning signal to the Government to control it. A) Running. B) Trotting. C) Hyper. D) Creeping. Show Answer Correct Answer: B) Trotting. 30. 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) 5.00%. B) -4.8%. C) 5.05%. D) -5.05%. Show Answer Correct Answer: C) 5.05%. Next →Related QuizzesMacroeconomics QuizzesEconomics QuizzesInflation 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 8Inflation And Deflation Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books