This quiz works best with JavaScript enabled. Home > Finance > Economics > Macroeconomics > Inflation And Deflation > Inflation And Deflation – Quiz 4 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Inflation And Deflation Quiz 4 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. An increase in government spending will most likely lead to inflation when A) It is spent on education. B) It is spent on imported capital goods. C) There is a large amount of spare capacity. D) The economy is near full capacity. Show Answer Correct Answer: D) The economy is near full capacity. 2. Which of the following is most likely to cause cost-push inflation? A) Decrease in the cost of firms. B) Increase in aggregate demand. C) Decrease in spending on imports. D) Increase in wages. Show Answer Correct Answer: D) Increase in wages. 3. Demand-pull inflation can be described as too many ..... chasing too few ..... A) Rupees, Goods. B) Jobs, Workers. C) Consumers, Producers. D) None of above. Show Answer Correct Answer: A) Rupees, Goods. 4. When prices rise rapidly at a rate of 10 to 20 % per annum, it is called Running Inflation. A) False. B) True. Show Answer Correct Answer: B) True. 5. Which of the following is increased due to inflation? A) Price of imports. B) Purchasing power. C) Competitiveness of exports. D) Cost of living. Show Answer Correct Answer: D) Cost of living. 6. What tool times how long it takes for a laser to travel from the instrument, to a mirror on the volcano and back? A) Global Positioning System (GPS). B) Electronic Distance Meter (EDM). C) Tilt meter. D) None of above. Show Answer Correct Answer: B) Electronic Distance Meter (EDM). 7. What is marketing A) Sales. B) Drawing a picture. C) Promoting and selling your products or services through advertising. D) None of above. Show Answer Correct Answer: C) Promoting and selling your products or services through advertising. 8. An increase and decrease in the overall level of prices is respectively called as: A) Inflation-Money velocity. B) Inflation-Deflation. C) Hyperinflation-Deflation. D) Deflation-Inflation. Show Answer Correct Answer: B) Inflation-Deflation. 9. ..... Higher prices of resources which are needed to produce goods or services pulls down all prices, thus, causing inflation. A) False. B) True. Show Answer Correct Answer: A) False. 10. What is the relationship between inflation and purchasing power? A) Inflation causes purchasing power to increase. B) Inflation causes purchasing power to decrease. C) Inflation has no effect on purchasing power. D) None of above. Show Answer Correct Answer: B) Inflation causes purchasing power to decrease. 11. ..... is a group of goods and services economists feel are important and are representative of the economy and are used to determine inflation and CPI. A) Cost-Push Inflation. B) Market Basket. C) Fixed Income. D) Inflation. Show Answer Correct Answer: B) Market Basket. 12. If your interest rate for your savings account is 5% per year and the average inflation rate is 3% per year, what happens to the value of your savings account in real terms after 2 years? A) Loses value. B) Gains value. C) Stays the same. D) None of the answers. Show Answer Correct Answer: B) Gains value. 13. Who is made worse off during a period of deflation? A) Creditors. B) Debtors. C) Fixed income earners. D) Cash holders. Show Answer Correct Answer: B) Debtors. 14. When there is high inflation, the loss of buying power, especially hurts those A) With high paying jobs. B) Who owns their homes. C) Who are on fixed incomes. D) None of above. Show Answer Correct Answer: C) Who are on fixed incomes. 15. Inflation results from ..... the money supply at too rapid a rate for a sustained period of time A) Decreasing. B) Increasing. Show Answer Correct Answer: B) Increasing. 16. How is Tarik affected by inflation? Tarik rents an apartment with a 3-year lease that locks in his monthly payment. A) Helped. B) Hurt. C) Not affected directly. D) None of above. Show Answer Correct Answer: A) Helped. 17. What is the term used to describe the global rise in home prices in the early 2000s? A) Housing bubble. B) Stock market bubble. C) Tulip mania. D) Internet bubble. Show Answer Correct Answer: A) Housing bubble. 18. What was the first Marvel Movie A) Iron man. B) The Incredible Hulk. Show Answer Correct Answer: A) Iron man. 19. Who is likely to suffer the least from increasing inflation rates? A) Someone with investments in real estate. B) Someone with large cash deposits in the bank. C) Banks. D) The municipalities. E) The central government. Show Answer Correct Answer: A) Someone with investments in real estate. 20. If the price index rises from 110 to 121, the inflation rate is 10% A) False. B) True. Show Answer Correct Answer: B) True. 21. If the CPI is 71 in 2001 and 78 in 2002, calculate the rate of inflation from 2001 to 2002. A) 9.86%. B) 8.97%. C) 9.76%. D) 10.16%. E) None of the answers. Show Answer Correct Answer: A) 9.86%. 22. When aggregate demand increases faster than aggregate supply, prices go up. What is this an example of: A) Demand-pull inflation. B) Cost-push inflation. C) Per-worker productivity. D) Deflation. Show Answer Correct Answer: B) Cost-push inflation. 23. Which of the following define as 'rises in the price level caused by excess demand'? A) Cost-push inflation. B) Demand-pull inflation. C) Monetary inflation. D) Hyperinflation. Show Answer Correct Answer: B) Demand-pull inflation. 24. Inflation that causes the supply curve to shift to the left and a reduction in the output is known as A) Demand pull-inflation. B) Cost-push inflation. C) Fully-anticipated inflation. D) Hyperinflation. Show Answer Correct Answer: B) Cost-push inflation. 25. Demand-pull inflation and cost-push inflation differ in that A) Demand-pull leads to lower real GDP and cost-push to higher real GDP. B) Demand-pull leads to higher real GDP and cost-push to lower real GDP. C) Demand-pull leads to greater unemployment and cost-push to lower unemployment. D) A combination of the above, depending on the size of AD and SRAS shifts. Show Answer Correct Answer: B) Demand-pull leads to higher real GDP and cost-push to lower real GDP. 26. What is the impact of deflation on unemployment? A) Deflation can lead to lower unemployment. B) Deflation has no impact on unemployment. C) Deflation leads to higher unemployment by reducing consumer spending. D) Deflation always leads to an increase in unemployment. Show Answer Correct Answer: A) Deflation can lead to lower unemployment. 27. What was Germany no longer able to do by 1923? A) Pay its Reparations. B) Gain more land from France. C) Supply oil to Poland. D) Gain a bigger military. Show Answer Correct Answer: A) Pay its Reparations. 28. What is Foreign direct investment? A) This is when a country makes an investment into a company. B) This is when a company makes an investment into a foreign country and has the right to control. C) When a domestic country invest into its own companies. D) When a foreign individual invest in domestic stock markets. Show Answer Correct Answer: B) This is when a company makes an investment into a foreign country and has the right to control. 29. This method of financing government spending is frequently called printing money because high-powered money (the monetary base) is created in the process. A) The finance of government spending through a Treasury sale of bonds that are then purchased by the Central Bank. B) Financing government spending by selling bonds to the public, which pays for the bonds with checks. C) Financing government spending with taxes. D) Financing government spending by selling bonds to the public, which pays for the bonds with currency. Show Answer Correct Answer: A) The finance of government spending through a Treasury sale of bonds that are then purchased by the Central Bank. 30. How does the economy benefit from deflation? A) Reduced unemployment from more jobs. B) Increased cost of living. C) Increased competitiveness of exports. D) Increased consumer spending. Show Answer Correct Answer: C) Increased competitiveness of exports. ← PreviousNext →Related QuizzesMacroeconomics QuizzesEconomics QuizzesInflation And Deflation Quiz 1Inflation And Deflation Quiz 2Inflation And Deflation Quiz 3Inflation 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