This quiz works best with JavaScript enabled. Home > Finance > Economics > Macroeconomics > Inflation And Deflation > Inflation And Deflation – Quiz 14 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Inflation And Deflation Quiz 14 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. What is the main lesson to learn from understanding inflation? A) The impact of economic mismanagement. B) The dangers of speculative bubbles. C) The importance of saving money. D) How to negotiate a raise at work. Show Answer Correct Answer: B) The dangers of speculative bubbles. 2. ..... indicates a change in the general price level in the economy. A) WPI. B) CPI. C) Food Basket. D) None of above. Show Answer Correct Answer: A) WPI. 3. Demand-pull inflation may be caused by: A) N outward shift in aggregate supply. B) Always reduces the cost of living. C) A reduction in interest rates. D) A reduction in government spending. Show Answer Correct Answer: C) A reduction in interest rates. 4. ..... is when prices are pulled up because demand for them is greater than supply. A) Consumer Price Index (CPI). B) Demand-Pull Inflation. C) Deflation. D) Fixed Income. Show Answer Correct Answer: B) Demand-Pull Inflation. 5. Which is the first stage when calculating the price level in the UK? A) Office of National Statistics interviews 650 households to find the 7000 most common goods and services and the % spent on each. B) Office of National Statistics interviews 70 households to find the 6500 most common goods and services and the % spent on each. C) Office of National Statistics interviews 7000 households to find the 650 most common goods and services and the % spent on each. D) Office of National Statistics interviews 700 households to find the 600 most common goods and services and the % spent on each. Show Answer Correct Answer: C) Office of National Statistics interviews 7000 households to find the 650 most common goods and services and the % spent on each. 6. Which of the following is most likely to be a cause of deflation A) An increase in Oil prices. B) A reduction in income tax. C) An improvement in technology. D) An increase in the supply of cash printed by the central bank. Show Answer Correct Answer: C) An improvement in technology. 7. What are the base years for the CPI (Consumer Price Index)? A) 1913-1915. B) 1982-1984. C) 1974-1976. D) None of above. Show Answer Correct Answer: B) 1982-1984. 8. As at October 2021 what was the CPI rate of inflation? A) 4%. B) 4.2%. C) 3.2%. D) 3.1%. Show Answer Correct Answer: B) 4.2%. 9. If the price level doubles, A) The quantity demanded of money falls by half. B) The value of money has been cut by half. C) Nominal income is unaffected. D) None of these answers. E) The money supply has been cut by half. Show Answer Correct Answer: B) The value of money has been cut by half. 10. Over the short term, low level inflation is barely noticeable. A) False. B) True. Show Answer Correct Answer: B) True. 11. The Federal Reserve targets inflation to average ..... % over the long term as measured by the PCE. A) 6%. B) 4%. C) 0%. D) 2%. Show Answer Correct Answer: D) 2%. 12. Inflation is the ..... A) The rate of increase in the general price level of goods and services over a period of time. B) The rising costs of suppliers in the economy. C) The increase in prices demanded by consumers. D) The general decrease in the price level of goods and services over a period of time. Show Answer Correct Answer: A) The rate of increase in the general price level of goods and services over a period of time. 13. ..... consist of Food Items of daily individual consumption. A) WPI. B) Food Basket. C) CPI. D) GDP. Show Answer Correct Answer: B) Food Basket. 14. The combination of a successful wage push by workers and the government's commitment to high employment leads to A) Demand-pull inflation. B) Supply-side inflation. C) Supply-shock inflation. D) Cost-push inflation. Show Answer Correct Answer: D) Cost-push inflation. 15. Which of these is NOT true about inflation? A) Inflation lowers consumer purchasing power. B) Inflation means ALL goods and services are more expensive. C) Inflation is a general rise in prices throughout the economy. D) None of above. Show Answer Correct Answer: B) Inflation means ALL goods and services are more expensive. 16. Which statement describes full employment? A) Everybody who wants a job has a job. B) There is no unemployment at all. C) There is no cyclical unemployment. D) There is no structural unemployment. Show Answer Correct Answer: C) There is no cyclical unemployment. 17. Assume that inflation this year is 3%. Which of the following offers the highest pay increase? A) An increase in your real wage by 1%. B) A nominal wage increase of 2%. C) An increase in your real wage by 1.5%. D) A nominal wage increase of 5%. Show Answer Correct Answer: D) A nominal wage increase of 5%. 18. What is the effect of a rise in producer price index in China on the consumer price index? A) No effect. B) Immediate rise. C) Delayed rise. D) Immediate fall. Show Answer Correct Answer: C) Delayed rise. 19. "The measures the changein the out-of-pocket expenditures of all urbanhouseholds" ..... US Bureau of Labor Statistics A) Consumer Goods Index(CGI). B) Inflation Index (II). C) Consumer Price Index (CPI). D) Urban Consumer Spending Survey (UCSS). Show Answer Correct Answer: C) Consumer Price Index (CPI). 20. The Bureau of Labor Statistics measures inflation by using what is called the A) Fixed Income Index (FII). B) Consumer Price Index (CPI). C) Consumer Purchasing Program (CPP). D) None of above. Show Answer Correct Answer: B) Consumer Price Index (CPI). 21. In Running Inflation price rise is between 2 to 10 % per annum. A) False. B) True. Show Answer Correct Answer: A) False. 22. How do economists measure inflation? A) By analyzing stock market trends. B) By conducting surveys of consumer preferences. C) By calculating the average price of goods and services. D) By monitoring government spending. Show Answer Correct Answer: C) By calculating the average price of goods and services. 23. What is the consequence of inflation on fixed-income earners? A) No impact on the purchasing power of their fixed income. B) A decrease in the purchasing power of their fixed income. C) A decrease in the cost of goods and services. D) An increase in the purchasing power of their fixed income. Show Answer Correct Answer: B) A decrease in the purchasing power of their fixed income. 24. Which of the following is an example of inflation? A) The price of an iPhone rises as demand increases. B) The price of a TV remains constant as quality improves. C) The average price of a laptop decreases as the money supply increases. D) The average price of groceries increases following an increase in the money supply. Show Answer Correct Answer: D) The average price of groceries increases following an increase in the money supply. 25. An increase in aggregate demand is more likely to lead to demand-pull inflation if: A) Aggregate supply is perfectly elastic. B) Aggregate supply is relatively elastic. C) Aggregate supply is unit elastic. D) Aggregate supply is perfectly inelastic. Show Answer Correct Answer: D) Aggregate supply is perfectly inelastic. 26. What is the third stage when calculating the price level in the UK? A) Take a weighted average of all the prices to find the price level. B) Take the maximum of all the prices to find the price level. C) Take the minimum of all the prices to find the price level. D) Take the median average of all the prices to find the price level. Show Answer Correct Answer: A) Take a weighted average of all the prices to find the price level. 27. An inflationary gap involves A) Cyclical unemployment greater than the natural rate of unemployment. B) Unemployment equal to the natural rate of unemployment. C) Cyclical unemployment less than the natural rate of unemployment. D) Zero cyclical unemployment and unemployment less than the natural rate of unemployment. Show Answer Correct Answer: D) Zero cyclical unemployment and unemployment less than the natural rate of unemployment. 28. The purchasing power of your income is called your A) Nominal income. B) Real income. Show Answer Correct Answer: B) Real income. 29. Rising prices resulting from a high level of aggregate demand relative to potential output A) Demand Pull. B) Cost Push. Show Answer Correct Answer: A) Demand Pull. 30. During a recession, inflation is likely to be ..... A) High. B) Low. Show Answer Correct Answer: B) Low. ← 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