This quiz works best with JavaScript enabled. Home > Finance > Economics > Macroeconomics > Inflation And Deflation > Inflation And Deflation – Quiz 13 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Inflation And Deflation Quiz 13 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. ..... is a measure of price change in a selected market basket of goods and services such as gasoline, food, clothing, and automobiles. A) Demand-Pull Inflation. B) Consumer Price Index (CPI). C) Deflation. D) Fixed Income. Show Answer Correct Answer: B) Consumer Price Index (CPI). 2. Consumers may defer consumption when A) They face a rising rate of inflation. B) The face deflation. C) They face disinflation. D) They face lower interest rates. Show Answer Correct Answer: B) The face deflation. 3. If aggregate demand rises faster than producers can supply goods services A) Demand-pull inflation. B) Cost-push inflation. C) Inflation. D) None of above. Show Answer Correct Answer: A) Demand-pull inflation. 4. Which is the following people is a member of the labour force? A) A person of working age who has given up looking for work. B) A person without a job who is actively seeking work. C) A retired person. D) A child at school. Show Answer Correct Answer: B) A person without a job who is actively seeking work. 5. If the CPI is 93 in 2017 and 97 in 2018, calculate the rate of inflation from 2017 to 2018. A) 4.3%. B) 4.12%. C) 4%. D) 5.1%. E) None of the answers. Show Answer Correct Answer: A) 4.3%. 6. What is Miguel's real rate of return? Miguel makes 4% on a U.S. Savings bond and inflation was 3%. A) 1%. B) 3%. C) 4%. D) 7%. Show Answer Correct Answer: A) 1%. 7. When inflation is high the ..... of money decreases A) Importance. B) Purchasing power. C) Validity. D) Cost value. Show Answer Correct Answer: B) Purchasing power. 8. Why is the minimum wage now higher than the minimum wage when your dad was your age? A) Because price inflation has caused wage inflation. B) Because the population has increased. C) Employers are nicer now than they used to be. D) Because more people go to college. Show Answer Correct Answer: A) Because price inflation has caused wage inflation. 9. With higher inflation a country exports A) Less. B) More. Show Answer Correct Answer: A) Less. 10. The rate of inflation can help you calculate how much you should ..... A) Pay in taxes. B) Give to your family. C) Spend on food. D) Ask to be paid. Show Answer Correct Answer: D) Ask to be paid. 11. If a country had a CPI of 104.0 last year and a CPI of 101.0 this year, then A) The average quality of goods and services between last year and this year. B) The average prices of goods and services increased between last year and this year. C) The average prices of goods and services decreased between last year and this year. D) The quantity of consumer goods and services produced decreased between last year and this year. Show Answer Correct Answer: C) The average prices of goods and services decreased between last year and this year. 12. What is most likely to happen when a government repeatedly boosts the economy by printing more money? A) People end up with a higher standard of living in the long run. B) The banks have too much money on hand and lend it at much cheaper interest rates. C) People come to expect the increases so they prepare for higher prices. D) The economy grows faster and becomes more stable. Show Answer Correct Answer: C) People come to expect the increases so they prepare for higher prices. 13. The CPI measures the cost of goods and services in a typical household in the economy. A) False. B) True. Show Answer Correct Answer: B) True. 14. Which one of the following is not a possible cause of demand-pull inflation? A) An increase in investment spending. B) An increase in government spending. C) An increase in consumption spending. D) An increase in the oil price. Show Answer Correct Answer: D) An increase in the oil price. 15. If you currently pay $ 130 per week on food for yourself, how much would you expect to pay 35 years from now if inflation stays at 2%? A) $ 260. B) $ 130. C) $ 630.50. D) $ 4550. Show Answer Correct Answer: A) $ 260. 16. Explain the difference between demand-pull inflation and cost-push inflation. A) Demand-pull inflation is caused by an increase in demand, while cost-push inflation is caused by an increase in production costs. B) Demand-pull inflation is caused by a decrease in production costs, while cost-push inflation is caused by an increase in demand. C) Demand-pull inflation is caused by an increase in production costs, while cost-push inflation is caused by an increase in demand. D) Demand-pull inflation is caused by a decrease in demand, while cost-push inflation is caused by an increase in production costs. Show Answer Correct Answer: A) Demand-pull inflation is caused by an increase in demand, while cost-push inflation is caused by an increase in production costs. 17. What tool measures the change in distance between two instruments anchored into the volcano? A) Global Positioning System (GPS). B) Electronic Distance Meter (EDM). C) Tilt meter. D) None of above. Show Answer Correct Answer: A) Global Positioning System (GPS). 18. How is the bank affected by inflation? Bank has loaned millions for mortgages at a fixed rate of interest. A) Helped. B) Hurt. C) Not affected directly. D) None of above. Show Answer Correct Answer: B) Hurt. 19. Higher prices mean money is worth (a) . A) More. B) A less. Show Answer Correct Answer: B) A less. 20. What is the main cause of the housing bubble in the early 2000s? A) A decrease in demand for housing. B) A decrease in population. C) A shortage in building materials. D) Low interest rates and deceitful lending practices. Show Answer Correct Answer: D) Low interest rates and deceitful lending practices. 21. Wage-Price Spiral A) A measurement that shows how the average cost of goods or services change over time. B) A sustained drop in the price of goods. C) Rising wages causing higher prices which cause higher wages. D) Income that does not increase even when prices go up. Show Answer Correct Answer: C) Rising wages causing higher prices which cause higher wages. 22. A government is faced with rising inflation. It wishes to reduce inflationary pressure while avoiding a fall in output. Which action is most likely to meet its needs? A) An increase in the exchange rate tagsInflation, Deflation, Disinflation. B) An increase in the budget surplus. C) An increase in taxation. D) An increase in laws to promote competition. Show Answer Correct Answer: D) An increase in laws to promote competition. 23. Which of the following statements is/are correct? One way to combat demand-pull inflation.i. is if the Reserve Bank raises the interest rates.ii.Demand-pull inflation usually leads to increased prices and increased unemployment.iii.Demand-pull inflation can be initiated by a cut in the marginal tax rate. A) I and ii. B) I and iii. C) Ii and ii. D) All three statements are correct. Show Answer Correct Answer: B) I and iii. 24. What's the lowest point of real GDP called? A) Contraction. B) Peak. C) Expansion. D) Trough. Show Answer Correct Answer: D) Trough. 25. Suppose that, because of inflation, a business in Russia must calculate, print, and mail a new price list to its customers each month. This is an example of A) Shoeleather costs. B) Costs due to confusion and inconvenience. C) Arbitrary redistributions of wealth. D) Costs due to inflation induced tax distortions. E) Menu costs. Show Answer Correct Answer: E) Menu costs. 26. Which of the following factors will cause demand-pull inflation? A) A fall in government spending. B) A fall in interest rates. C) An increase in taxation. D) Falling consumer confidence. Show Answer Correct Answer: B) A fall in interest rates. 27. The effects of inflation on the price competitiveness of a country's products may be offset by: A) A depreciation of the currency. B) A revaluation of the currency. C) An appreciation of the currency. D) Lower inflation abroad. Show Answer Correct Answer: A) A depreciation of the currency. 28. Inflation works its way quickly into the economy through retail prices. A) True. B) False. Show Answer Correct Answer: B) False. 29. Which out of the following is phenomenon that leads to Cost-Push Inflation? A) It is a situation when aggregate demand in an economy outpaces aggregate supply. B) It is a situation of persistent rise in inflation along with dip in growth and increase in unemployment. C) It is a situation caused by an increase in prices of inputs like labour, raw material etc. D) It is a situation when a nation experiences very high and accelerating inflation. Show Answer Correct Answer: C) It is a situation caused by an increase in prices of inputs like labour, raw material etc. 30. What cause of inflation comes from an increase in commodity prices such as oil and wheat, or an increase in wages? 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: A) Cost-push 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