This quiz works best with JavaScript enabled. Home > Finance > Economics > Macroeconomics > Inflation And Deflation > Inflation And Deflation – Quiz 15 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Inflation And Deflation Quiz 15 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. How does inflation impact fixed-income earners? A) Inflation increases the value of fixed-income for earners. B) Inflation has no impact on fixed-income earners. C) Inflation only impacts variable-income earners. D) Inflation erodes the purchasing power of fixed-income earners. Show Answer Correct Answer: D) Inflation erodes the purchasing power of fixed-income earners. 2. This group of people benefit from inflation: A) Lenders. B) Savers. C) Borrowers. D) None of above. Show Answer Correct Answer: C) Borrowers. 3. What is most likely to cause a fall in the rate of inflation? A) An increase in consumer spending. B) An increase in wage rates. C) An increase in import prices. D) An increase in income tax. Show Answer Correct Answer: D) An increase in income tax. 4. Who is most likely to benefit during a period of inflation? A) Creditors (lenders). B) Fixed income earners. C) Debtors (borrowers). D) Holders of cash. Show Answer Correct Answer: C) Debtors (borrowers). 5. Combination of slow growth and fast-rising prices A) Hyperinflation. B) Demand pull. C) Cost plus. D) Stagflation. Show Answer Correct Answer: D) Stagflation. 6. Which post WWII US President used a temporary freeze on wages and prices to control inflation and stabilize the dollar? A) President Nixon. B) President Eisenhower. C) President Kennedy. D) President Clinton. Show Answer Correct Answer: A) President Nixon. 7. In the U.S., inflation occurs A) Rarely. B) Occasionally. C) Often. D) None of above. Show Answer Correct Answer: C) Often. 8. What happens to purchasing power as inflation increases? A) Increases. B) Decreases. C) Remains the same. D) None of above. Show Answer Correct Answer: B) Decreases. 9. Which of the following is NOT a limitation of the CPI? A) Consumers changing their consumption patterns due to changing prices. B) Comparisons over long periods of time (more than 10 years) are difficult. C) Consumers tend to be loyal to particular products so their consumption patterns will not really change. D) Not all consumers will consume what is in the 'typical' basket of goods and services. Show Answer Correct Answer: C) Consumers tend to be loyal to particular products so their consumption patterns will not really change. 10. What are some factors that can influence the CPI? A) Currency exchange rates, stock market fluctuations, interest rates. B) Consumer preferences, advertising strategies, social media influence. C) Changes in weather conditions, technological advancements, population growth. D) Changes in prices, consumer spending patterns, government policies, cost of production, and competition. Show Answer Correct Answer: D) Changes in prices, consumer spending patterns, government policies, cost of production, and competition. 11. A decrease of inflation rates is called A) Disinflation. B) Deflation. Show Answer Correct Answer: A) Disinflation. 12. Which of the following is TRUE of the CPI? A) The CPI is the unweighted average of all price changes in an economy. B) The CPI is a modal average. C) The CPI is a weighted average of a typical basket of goods and services from urban consumers. D) The CPI is based on the average spending patterns of rural consumers. Show Answer Correct Answer: C) The CPI is a weighted average of a typical basket of goods and services from urban consumers. 13. What is a supply shock? A) A sudden increase in the availability of productive resources. B) A sudden decrease in the availability of an important resource. C) A decrease in production costs. D) An increase in consumer spending. Show Answer Correct Answer: B) A sudden decrease in the availability of an important resource. 14. When the economy is at full-employment, changes in the money supply have ..... effect on real output in the long-run A) A positive. B) A negative. C) No. D) None of above. Show Answer Correct Answer: C) No. 15. A government wishes to stimulate economic recovery. Which action will assist this? A) Increasing interest rates. B) Increasing indirect taxation. C) Decreasing government investment. D) Decreasing income tax. Show Answer Correct Answer: D) Decreasing income tax. 16. How many Harry Potter movies are there? A) 5. B) 9. C) 7. D) 8. Show Answer Correct Answer: D) 8. 17. Which is NOT one of the top 3 categories of items in the basket of goods used to calculate CPI? A) Housing. B) Communication. C) Transportation. D) Food & Beverages. Show Answer Correct Answer: B) Communication. 18. Extremely rapid inflation with the price level rising by at least fifty per cent each month A) Hyperinflation. B) Inflation. C) Stagnation. D) Deflation. Show Answer Correct Answer: A) Hyperinflation. 19. What type of inflation is caused when banks print more money? A) Increase in the money supply. B) Hyperinflation. C) Bankflation. D) Monetary inflation. Show Answer Correct Answer: D) Monetary inflation. 20. An example of a real variable is A) The wage rate in euros. B) None of these answers are real variables. C) The price of corn. D) The nominal interest rate. E) The ratio of the value of wages to the price of soda. Show Answer Correct Answer: E) The ratio of the value of wages to the price of soda. 21. By comparing the price change of a market basket of goods and services over time, we can determine the rate of inflation or deflation. A) False. B) True. Show Answer Correct Answer: B) True. 22. The Consumer Price Index (CPI) is best used to determine A) Currency exchange rates. B) The Dow Jones Index. C) The unemployment rate. D) The rate of inflation. Show Answer Correct Answer: D) The rate of inflation. 23. ..... High interest rates tend to encourage consumers to buy goods that are often bought with credit such as cars, houses, and other expensive items. A) True. B) False. Show Answer Correct Answer: B) False. 24. What is the main cause of falling prices in Japan between 1995 and 2014? A) Low demand. B) Global commodity prices. C) High demand. D) Government intervention. Show Answer Correct Answer: A) Low demand. 25. Maintaining inflation rates at 2% or below is known as ..... A) Inflation stability. B) Market economy. C) Market forces. D) Savings rate. E) Price stability. Show Answer Correct Answer: E) Price stability. 26. The prices of gold, platinum, fine art and yachts are examples of prices used as leading indicators of inflation, since people hold onto them when they expect overall price levels to rise. A) True. B) False. Show Answer Correct Answer: A) True. 27. Where does the word "inflation" come from? A) From the Latin "to swell", "to inflate". B) From the Latin "lustris". C) From the Latin "mandacure". D) Von dem bambergerischen "beer". Show Answer Correct Answer: A) From the Latin "to swell", "to inflate". 28. The quantity theory of money concludes that an increase in the money supply causes A) A proportional increase in velocity. B) A proportional increase in real output. C) A proportional decrease in prices. D) A proportional increase in prices. E) A proportional decrease in velocity. Show Answer Correct Answer: D) A proportional increase in prices. 29. Whom does inflation hurt the most? A) Producers. B) Debtors. C) Creditors. D) Consumers. Show Answer Correct Answer: C) Creditors. 30. ..... is income that doesn't change. A) Cost-Push Inflation. B) Demand-Pull Inflation. C) Fix Income. D) Market Basket. Show Answer Correct Answer: C) Fix Income. ← 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