This quiz works best with JavaScript enabled. Home > Finance > Economics > Macroeconomics > Inflation And Deflation > Inflation And Deflation – Quiz 7 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Inflation And Deflation Quiz 7 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. When might rapid inflation together with low interest rates be a source of concern for a consumer? A) When a consumer pays a fixed rent for their accommodation. B) When a consumer wishes to buy a good on credit. C) When a consumer needs to use savings for regular expenditure. D) When a consumer lives on a pension linked to the consumer price index. Show Answer Correct Answer: C) When a consumer needs to use savings for regular expenditure. 2. Deflation is not necessarily harmful to an economy. It depends on its cause. A) True. B) False. Show Answer Correct Answer: A) True. 3. Which of the following types of inflation occurs when sales drop and retailers cannot place higher prices on customers? A) Disinflation. B) Deflation. C) Hyperinflation. D) Pre-inflation. Show Answer Correct Answer: A) Disinflation. 4. What is the definition of disinflation? A) A period when the general price level of goods and services falls. B) A sustained increase in the general price level of goods and services in an economy over a period of time. C) A slowdown in the rate of increase of the general price level of goods and services in a nation's gross domestic product over time. D) An inflationary period accompanied by rising unemployment and lack of growth in consumer demand and business activity. Show Answer Correct Answer: C) A slowdown in the rate of increase of the general price level of goods and services in a nation's gross domestic product over time. 5. The relative purchasing power of a 1913 US dollar was about ..... in 2011? A) .50 cents. B) .95 cents. C) .05 cents. D) None of above. Show Answer Correct Answer: C) .05 cents. 6. ..... inflation brings a total collapse of the Economy. A) Creeping. B) Galloping. C) Running. D) Walking. Show Answer Correct Answer: B) Galloping. 7. What is the impact of deflation on the real value of debt? A) Stabilizes the real value of debt. B) Increases the real value of debt. C) Decreases the real value of debt. D) No impact on the real value of debt. Show Answer Correct Answer: B) Increases the real value of debt. 8. If the Price of the Market Basket in 2008 is $ 40 and the Price of the Market Basket in the base year is $ 20, what is the CPI for 2008? A) 200. B) 2. C) 60. D) 80. Show Answer Correct Answer: A) 200. 9. How do we measure inflation? A) Using demand and supply. B) CPI. C) Gini coefficient. D) GDP. Show Answer Correct Answer: B) CPI. 10. One of the biggest costs of inflation is A) The loss of revenue from decreasing prices during deflation. B) The cost of re-writing paychecks to adjust wages. C) The negative economic effects of reducing inflation. D) The deadweight loss spent by producers changing prices more often. Show Answer Correct Answer: C) The negative economic effects of reducing inflation. 11. Which one of these correctly describes how lenders and borrowers are affected by inflation? A) Lenders helped, borrowers hurt. B) Lenders hurt, borrowers helped. C) Lenders helped, borrowers helped. D) Lenders hurt, borrowers hurt. Show Answer Correct Answer: B) Lenders hurt, borrowers helped. 12. What is the minimum wage in Florida A) $ 10.00 per hour. B) $ 11.00 per hour. C) $ 15.00 per hour. D) None of above. Show Answer Correct Answer: A) $ 10.00 per hour. 13. A little inflation is a good thing if you ..... A) Save money. B) Owe money. C) Spend money. D) Loan money. Show Answer Correct Answer: B) Owe money. 14. How does deflation impact the economy? A) Deflation impacts the economy by reducing consumer spending, lowering business profits, increasing debt burden, and potentially leading to a deflationary spiral. B) Deflation has no impact on the economy. C) Deflation leads to higher consumer spending and business profits. D) Deflation reduces the debt burden on individuals and businesses. Show Answer Correct Answer: A) Deflation impacts the economy by reducing consumer spending, lowering business profits, increasing debt burden, and potentially leading to a deflationary spiral. 15. What was responsible for the German hyperinflation and inflation after the American Revolution? A) Too much money being printed. B) The struggle for independence. C) Fiscal policies designed to reduce the federal debt. D) Crop freezes that caused a food shortage. Show Answer Correct Answer: A) Too much money being printed. 16. Which group benefits from negative real interest rates? A) Borrowers. B) Savers. C) No-one. D) None of above. Show Answer Correct Answer: A) Borrowers. 17. The ..... of a product or services is the group of people it is aimed at A) Target market. B) Market leader. C) Market research. D) None of above. Show Answer Correct Answer: A) Target market. 18. What statistical series is used to compute inflation? A) The producer price index (PPI). B) The monthly market basket. C) The consumer price index (CPI). D) The leading economic price index. Show Answer Correct Answer: C) The consumer price index (CPI). 19. What is the main cause of deflation in an economy? A) High demand. B) Low demand. C) Government intervention. D) Rising energy costs. Show Answer Correct Answer: B) Low demand. 20. Which of the following define as 'rises in the price level caused by higher costs of production? A) Cost-push inflation. B) Demand-pull inflation. C) Monetary inflation. D) Hyperinflation. Show Answer Correct Answer: A) Cost-push inflation. 21. Did prices go up or down in 2009? 2008 CPI = 212 2009 CPI = 214 A) Up. B) Down. Show Answer Correct Answer: A) Up. 22. If minimum wage is $ 10 an hour now, and it keeps up with inflation at a rate of 8%, how much would it be 20 years from now? A) $ 469. B) $ 160. C) $ 10. D) $ 46.60. Show Answer Correct Answer: D) $ 46.60. 23. Inflation that occurs when there is more money printed than goods and service being produced. A) Cost push. B) Demand pull. C) Money demand inflation. D) Money supply. Show Answer Correct Answer: D) Money supply. 24. Which out of the following is phenomenon that leads to Demand-Pull 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: A) It is a situation when aggregate demand in an economy outpaces aggregate supply. 25. What is the target for inflation set by many central banks today? A) 1%. B) 3%. C) 4%. D) 2%. Show Answer Correct Answer: D) 2%. 26. How is Sam affected by inflation of college prices? Sam puts money away in a 529 college savings account for his child. A) Helped. B) Hurt. C) Not affected directly. D) None of above. Show Answer Correct Answer: B) Hurt. 27. The phrase that "money is neutral in the long run, " means: A) Money is just a middle-man for the barter system. B) After enough time, money is worthless. C) If the money supply triples, prices will triple. D) Currency exchange rates are always fluctuating. Show Answer Correct Answer: C) If the money supply triples, prices will triple. 28. If CPI last year was 177 and the CPI this year is 186, what is the rate of inflation? A) 5%. B) 8%. C) 6%. D) 7%. Show Answer Correct Answer: A) 5%. 29. What happens to the slope of the ground before a volcanic eruption? A) Slope decreases. B) Slope stays the same. C) Slope increases. D) None of above. Show Answer Correct Answer: C) Slope increases. 30. Which of these are likely to be winners in periods of high, unanticipated inflation? A) Borrowers at fixed interest rates. B) People on fixed incomes. C) Lenders. D) Savers. Show Answer Correct Answer: A) Borrowers at fixed interest rates. ← 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 8Inflation And Deflation Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books