This quiz works best with JavaScript enabled. Home > Finance > Economics > Macroeconomics > Inflation And Deflation > Inflation And Deflation – Quiz 3 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Inflation And Deflation Quiz 3 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. When inflation is high, the (a) of the dollar decreases. A) Importance. B) Cost value. C) A purchasing power. D) Validity. Show Answer Correct Answer: C) A purchasing power. 2. Which type of deflation is often referred to as 'bad' deflation A) That caused by decreased AD. B) That caused by increased AS. Show Answer Correct Answer: A) That caused by decreased AD. 3. Most economists believe that some inflation will occur when the economy is growing. A) True. B) False. Show Answer Correct Answer: A) True. 4. Which of the following types of inflation involves the government using financial stimuli to increase the country's output? A) Reflation. B) Deflation. C) Disinflation. D) Hyperinflation. Show Answer Correct Answer: A) Reflation. 5. When inflation increases, the value of money ..... A) Decreases. B) Increases. Show Answer Correct Answer: A) Decreases. 6. What are the consequences of deflation? A) Increase in the money supply. B) Declining demand and increasing bankruptcies. C) Increase in demand and stabilization of companies. D) Birth rate in Germany increases by 50%. Show Answer Correct Answer: B) Declining demand and increasing bankruptcies. 7. Demand-pull theory is when the demand for goods and services exceed supply causing supply to increase A) True. B) False. Show Answer Correct Answer: A) True. 8. Inflation occurs whenever A) The price level rises. B) The money supply increases. C) The price level rises continuously over a period of time. D) The price level falls continuously over a period of time. Show Answer Correct Answer: C) The price level rises continuously over a period of time. 9. Causes of Inflation are ..... A) Demand-pull. B) Supply-shock. C) Wage push. D) All is correct. Show Answer Correct Answer: D) All is correct. 10. Fiscal policies that involve substantial tax cuts increase demand and likely lead to inflation. A) False. B) True. Show Answer Correct Answer: B) True. 11. In 2008, Zimbabwe ran out of paper for printing money after prices ..... A) Tripled. B) Halved. C) Quadrupled. D) Doubled. Show Answer Correct Answer: D) Doubled. 12. An appropriate policy to overcome demand pull inflation is by A) A tight monetary policy. B) An easy monetary policy. C) Reducing taxes. D) Increasing government spending. Show Answer Correct Answer: A) A tight monetary policy. 13. The overall price level is still rising, but at a slower pace than before. A) Deflation. B) Disinflation. C) Inflation. D) None of above. Show Answer Correct Answer: B) Disinflation. 14. Every action and movement of each economic sector cause an increase in the price of commodity. What cause of Inflation pertains to this? A) Cost-push. B) Demand-pull. C) Structural. D) Hyperinflation. Show Answer Correct Answer: C) Structural. 15. How much was a loaf of bread in Weimar Germany by 1923? A) 200, 000 billion marks. B) 100 marks. C) 10 marks. D) 1 mark. Show Answer Correct Answer: A) 200, 000 billion marks. 16. Which of the following measure of inflation includes mortage costs? A) CPIH. B) RPI. C) RPIH. D) CPI. Show Answer Correct Answer: B) RPI. 17. To reduce the rate of deflation, an appropriate policy would be A) Higher taxes. B) Lower government spending. C) Lower interest rates. D) Restrictions on bank lending. Show Answer Correct Answer: C) Lower interest rates. 18. What is the effect of inflation on income distribution? A) Stabilizes income distribution. B) No impact on income distribution. C) Increases income inequality. D) Redistributes income and wealth. Show Answer Correct Answer: D) Redistributes income and wealth. 19. When Inflation occurs, A) The purchasing power of money decreases in the economy. B) Basic necessities become cheaper. C) The dollar appreciates on foreign exchange markets. D) Price decreases in the economy. Show Answer Correct Answer: A) The purchasing power of money decreases in the economy. 20. Which Avenger does Thor team up with in Thor:Ragnarok? A) Captain America. B) Hulk. C) Hawkeye. D) Iron Man. Show Answer Correct Answer: B) Hulk. 21. National Income is always more than the domestic gross product A) True. B) False. Show Answer Correct Answer: B) False. 22. Which statement is true about the Supply shock or Cost-push Inflation? A) One of the illustrations is climate change. B) Caused from increase the cost of production. C) Caused from rising energy and commodity prices. D) All is true. Show Answer Correct Answer: D) All is true. 23. Gross Domestic product plus ..... is gross national product A) NPIA. B) Taxes and Subsidy. C) Depreciation. D) Profits. Show Answer Correct Answer: A) NPIA. 24. Nominal wage adjusted for inflation is described as A) RPI. B) Constant prices. C) Real wage. D) Living wage. Show Answer Correct Answer: C) Real wage. 25. 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 5%? A) $ 717.60. B) $ 4550. C) $ 130. D) $ 650. Show Answer Correct Answer: A) $ 717.60. 26. Nominal wage adjusted for inflation A) Living wage. B) Real wage. C) Constant prices. D) RPI. Show Answer Correct Answer: B) Real wage. 27. What is the likely impact of inflation on the current account on the balance of payments? A) Improvement. B) Stability. C) No impact. D) Deterioration. Show Answer Correct Answer: D) Deterioration. 28. To reduce inflation in the long term, appropriate policies include A) Policies to increase aggregate demand. B) Policies to reduce aggregate supply. C) Fiscal policies that boost spending. D) Supply side policies. Show Answer Correct Answer: D) Supply side policies. 29. Jose got a 6% raise in his salary, but the rate of inflation is 2%. What is Jose's REAL rate of salary increase? (a) A) A 4%. B) 3%. C) 5%. D) 2%. Show Answer Correct Answer: A) A 4%. 30. In a volcano, magma collects in a packet called ..... A) Magma flow. B) Magma chamber. C) Hot spot. D) Magma pipe. Show Answer Correct Answer: B) Magma chamber. ← PreviousNext →Related QuizzesMacroeconomics QuizzesEconomics QuizzesInflation And Deflation Quiz 1Inflation And Deflation Quiz 2Inflation 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