This quiz works best with JavaScript enabled. Home > Finance > Economics > Macroeconomics > Inflation And Deflation > Inflation And Deflation – Quiz 11 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Inflation And Deflation Quiz 11 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. What is the relationship between inflation and unemployment? A) There is no relationship between inflation and unemployment. B) Inflation and unemployment always move in the same direction. C) Inflation has no impact on unemployment. D) When inflation is high, unemployment tends to be low, and vice versa. Show Answer Correct Answer: D) When inflation is high, unemployment tends to be low, and vice versa. 2. True or false? An expectation of increasing inflation is likely to slow down household consumption. A) True. B) False. Show Answer Correct Answer: B) False. 3. In those countries that do not have well-developed capital markets A) A. inflation is uncommon because they cannot finance budget deficits by issuing bonds. B) B. inflation is uncommon because government expenditures must be financed with taxes and/or user fees. C) C. budget deficits will tend to be inflationary. D) Both (a) and (b) of the above. Show Answer Correct Answer: C) C. budget deficits will tend to be inflationary. 4. In an economically stable country, prices usually ..... A) Fall annually. B) Rise steadily annually. C) Rise rapidly. D) Fall rapidly. Show Answer Correct Answer: B) Rise steadily annually. 5. Economics is a study of choices becausse ..... A) It leads to thebest possible way to avoid inflation in order to bestsatisfy unlimited human needs and wants. B) It leads to thebest possible use of scarce resources in order to bestsatisfy unlimited human needs and wants. C) It leads to thebest possible use of scarce resources in order to bestsave and invest our money. D) None of above. Show Answer Correct Answer: B) It leads to thebest possible use of scarce resources in order to bestsatisfy unlimited human needs and wants. 6. Deflation is uncommon in the real world because A) Wages do not fall easily and firms fear price wars. B) Competitive markets keep prices from falling. C) Governments impose price floors. D) Firms will be unable to sell their products. Show Answer Correct Answer: A) Wages do not fall easily and firms fear price wars. 7. Which of the following economic stages have the lowest inflation? A) Boom. B) Recession. C) Slump. D) Growth. Show Answer Correct Answer: C) Slump. 8. What is the likely effect of deflation on national income? A) Stability. B) Increase. C) No impact. D) Decrease. Show Answer Correct Answer: D) Decrease. 9. What inevitably leads to economic collapse. (a) A) Inflation. B) A hyperinflation. C) Recession. D) Deflation. Show Answer Correct Answer: B) A hyperinflation. 10. Consumer spending increased in 2010.What other economic indicator is most likely to have increased as a result of the rise in consumer spending? A) Inflation. B) Unemployment. C) Government budget deficit. D) Terms of trade. Show Answer Correct Answer: A) Inflation. 11. More expansion of foreign direct investment can boost: A) Employment. B) Money circulation. C) Unemployment. D) Supply. Show Answer Correct Answer: A) Employment. 12. What was Germany no longer able to do by 1923 (and break the agreement of the Treaty of Versailles)? A) Not able to provide coal to Austria. B) Not able to supply coal to Britain. C) No able to supply coal to Hungary. D) Not able to provide coal to France. Show Answer Correct Answer: D) Not able to provide coal to France. 13. Which of the following is TRUE about inflation? A) All price increases are instances of inflation. B) Inflation happens when the money supply shrinks unexpectedly. C) Inflation in the long run typically follows periods of expansion in the money supply. D) Rapid inflation occurs when the Federal Reserve does not create money. Show Answer Correct Answer: C) Inflation in the long run typically follows periods of expansion in the money supply. 14. If money is neutral, A) An increase in the money supply does nothing. B) A change in the money supply only affects real variables such as real output. C) A change in the money supply reduces velocity proportionately; therefore there is no effect on either prices or real output. D) A change in the money supply only affects nominal variables such as prices and wages. E) The money supply cannot be changed because it is tied to a commodity such as gold. Show Answer Correct Answer: D) A change in the money supply only affects nominal variables such as prices and wages. 15. What is a possible long-term result of demand-side deflation? A) Economic boom. B) Recession. C) No long-term impact. D) None of above. Show Answer Correct Answer: B) Recession. 16. Demand-pull inflation often occurs because a government A) Prints too much money. B) Is not printing enough money. C) Is creating too few regulations. D) None of above. Show Answer Correct Answer: A) Prints too much money. 17. Hyperinflation occurs when: A) A country's GDP is increasing at a very high rate. B) A country's prices are increasing at a very high rate. C) A country's productivity is increasing at a very high rate. D) None of above. Show Answer Correct Answer: B) A country's prices are increasing at a very high rate. 18. Which of the following would cause Demand Pull inflation A) An increase in the price of oil. B) A depreciation in the exchange rate. C) A cut in government spending. D) An Increase in taxation. Show Answer Correct Answer: B) A depreciation in the exchange rate. 19. How does inflation affect different sectors of the economy? A) Inflation only affects the financial sector of the economy. B) Inflation causes all sectors of the economy to collapse. C) Inflation affects different sectors of the economy in various ways. D) Inflation has no impact on different sectors of the economy. Show Answer Correct Answer: C) Inflation affects different sectors of the economy in various ways. 20. What happens to the value of savings during inflation? A) The value of savings fluctuates randomly during inflation. B) The value of savings decreases during inflation as the purchasing power of money decreases. C) The value of savings increases during inflation as the purchasing power of money increases. D) The value of savings remains the same during inflation. Show Answer Correct Answer: B) The value of savings decreases during inflation as the purchasing power of money decreases. 21. Which of the following describes demand-pull inflation A) The last stage before monetary collapse. B) The economy cannot produce quickly enough for all sectors, and shortages occur. C) A 1 to 3 percent rise in prices over the course of a year. D) Rising costs in energy which cause higher prices of products. Show Answer Correct Answer: B) The economy cannot produce quickly enough for all sectors, and shortages occur. 22. After Haiti's earthquake destroyed much of the productive capital in the nation, it also experienced massive inflation. The inflation was likely A) Cost-push Inflation. B) Demand-pull Inflation. Show Answer Correct Answer: A) Cost-push Inflation. 23. Name one cause of deflation. A) Increase in government spending. B) Decrease in overall demand. C) Increase in overall supply. D) Increase in overall demand. Show Answer Correct Answer: B) Decrease in overall demand. 24. In the U.S., deflation occurs A) Often. B) Never. C) Rarely. D) Every ten years. Show Answer Correct Answer: C) Rarely. 25. Prices of eggs and bacon have increased, forcing a local diner to increase their prices. A) Cost Push Inflation. B) Demand Pull Inflation. Show Answer Correct Answer: A) Cost Push Inflation. 26. Creeping inflation is typically considered bad for an economy? A) False. B) True. Show Answer Correct Answer: A) False. 27. In the long run, the demand for money is most dependent upon A) The availability of credit cards. B) The interest rate. C) The availability of banking outlets. D) The level of prices. Show Answer Correct Answer: D) The level of prices. 28. Name one cause of inflation. A) Increase in the supply of money in circulation. B) Decrease in the cost of production. C) Increase in the demand for goods and services. D) Decrease in the supply of money in circulation. Show Answer Correct Answer: A) Increase in the supply of money in circulation. 29. Inflation that is out of control A) Wage-price spiral. B) Consumer Price Index. C) Inflation rate. D) Hyperinflation. E) Quantity theory. Show Answer Correct Answer: D) Hyperinflation. 30. What is a claimant count? A) The number of people in employment. B) The number of adults of working age without a job. C) The number of retired people. D) The number of people claiming unemployment benefit. Show Answer Correct Answer: D) The number of people claiming unemployment benefit. ← 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