This quiz works best with JavaScript enabled. Home > Economics > Macroeconomics > Inflation > Inflation – Quiz 1 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Inflation Quiz 1 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. ..... type of Inflation is a warning signal to the Government to control it. A) Trotting. B) Running. C) Creeping. D) Hyper. Show Answer Correct Answer: A) Trotting. 2. The redistribution effects of a high rate of inflation may involve losses for ..... and gains for ..... A) Lenders/borrows. B) Borrowers/lenders. C) Savers/holders of cash. D) Borrowers/savers. Show Answer Correct Answer: A) Lenders/borrows. 3. Unemployment is most likely to occur during an economic expansion A) False. B) Mr. Bush. C) 12. D) True. Show Answer Correct Answer: A) False. 4. The quantity of goods and services a person can buy with a given amount of money. A) Inflation. B) Money Supply. C) Bank. D) Buying Power. Show Answer Correct Answer: D) Buying Power. 5. Costs when they make more trips to the bank in order to hold significant amounts of money. A) Bracket creep. B) Expected inflation. C) Shoe leather costs. D) Menu cost. Show Answer Correct Answer: C) Shoe leather costs. 6. After writing a check for $ 172, your account is overdrawn by $ 31. How much money did you have in the account before you wrote the check? A) $ 203. B) $ 131. C) $ 141. D) $ 172. Show Answer Correct Answer: C) $ 141. 7. The ..... for a given year is 100 times the ratio of nominal GDP to real GDP that year. A) GDP Deflator. B) Market Basket. C) Inflation Rate. D) Aggregate Price Level. Show Answer Correct Answer: A) GDP Deflator. 8. The condition of a continually rising price level is defined as A) Inflation. B) Stagflation. C) Stagnation. D) Disinflation. Show Answer Correct Answer: A) Inflation. 9. Which of the following is a cause of Cost-Push Inflation? A) Higher tax discounts on products. B) Lower prices for raw materials. C) Increases in the costs to produce. D) Lower labor costs. Show Answer Correct Answer: C) Increases in the costs to produce. 10. The ..... considers the weighted averages of a group of consumer goods and services. A) Consumer price index. B) Aggregate supply. C) Producer price index. D) Aggregate demand. Show Answer Correct Answer: A) Consumer price index. 11. With which of the given ways to finance government spendings seigniorage is connected: A) Printing money. B) Taxation. C) Borrowing. D) None of the answers is correct. Show Answer Correct Answer: A) Printing money. 12. Which is an effect of inflation on the government? A) Real GDP is higher. B) Increases confidence in the government. C) Decreases nominal costs. D) Real GDP is lower. Show Answer Correct Answer: D) Real GDP is lower. 13. The government through the Central Bank is going to repurchase all bonds issued to the public. This measure would best: A) Increase Cost-push Inflation. B) Decrease Demand-pull Inflation. C) Increase Monetary Inflation. D) Have no effect on the economy. Show Answer Correct Answer: C) Increase Monetary Inflation. 14. The GDP DeflatorI. is used to calculate inflation rates.II. is an alternative to the CPI.III. is more accurate than the CPI. A) Only I is true. B) I and II are true. C) I and III are true. D) None are correct. Show Answer Correct Answer: B) I and II are true. 15. A general decline in the level of prices is called A) Deflation. B) Hyperinflation. C) Stagnation. D) Inflation. Show Answer Correct Answer: A) Deflation. 16. ..... consist of Food Items of daily individual consumption. A) CPI. B) Food Basket. C) GDP. D) WPI. Show Answer Correct Answer: B) Food Basket. 17. Inflation is the state in which ..... A) The value of money decreases. B) The value of money increases. C) The value of the money increases first and then decreases. D) The value of money decreases first and increases later. Show Answer Correct Answer: A) The value of money decreases. 18. What would be likely to increase inflation in an economy? MAY/JUNE 2007 01 A) B an increase in interest rates. B) A an increase in consumer saving. C) C an increase in labour productivity. D) D an increase in taxes on imports. Show Answer Correct Answer: D) D an increase in taxes on imports. 19. It assumes that people save in order to distribute their consumption over their lifetime. A) Savings. B) Life cycle hypothesis. C) Wealth. D) Permanent income theory. Show Answer Correct Answer: B) Life cycle hypothesis. 20. Why might students be affected adversely by inflation? A) Teachers would lose their jobs. B) Students usually work for low wages. C) Many students would lose their jobs. D) School lunch costs would rise sharply. Show Answer Correct Answer: B) Students usually work for low wages. 21. As price level in the nation's economy decreases, A) Purchasing power increases. B) Purchasing power decreases. C) Supply increases. D) Foreign demand on goods decreases. Show Answer Correct Answer: B) Purchasing power decreases. 22. The effects of inflation on the price competitiveness of a country's products may be offset by: A) A depreciation of the currency. B) An appreciation of the currency. C) A revaluation of the currency. D) Lower inflation abroad. Show Answer Correct Answer: A) A depreciation of the currency. 23. Which of the following is NOT a component of GDP? A) Consumer Spending. B) Investment. C) Net Exports. D) Savings. Show Answer Correct Answer: D) Savings. 24. The rate of inflation is most commonly measured by use of A) A price deflator. B) The GDP deflator. C) The consumer price index. D) All of the above. Show Answer Correct Answer: C) The consumer price index. 25. ..... inflation is regarded as safe and essential for Economic Growth. A) Walking. B) Hyper. C) Creeping. D) Running. Show Answer Correct Answer: C) Creeping. 26. How do we measure inflation? A) Using demand and supply. B) CPI. C) Gini coeficient. D) GDP. Show Answer Correct Answer: B) CPI. 27. Which is a general cost of inflation? A) Certainty in the market. B) Potential fall in real income. C) Increase in competitiveness. D) Increase in real savings. Show Answer Correct Answer: B) Potential fall in real income. 28. When I need to ..... money from my checking account, I can use my debit card at an ATM. A) Overdraw. B) Inflation. C) Withdraw. D) Balance. Show Answer Correct Answer: C) Withdraw. 29. An increase in aggregate demand is likely to lead to A) Demand-push inflation. B) Cost-push inflation. C) Demand-pull inflation. D) Cost-pull inflation. Show Answer Correct Answer: C) Demand-pull inflation. 30. If nominal out is $ 100 billion dollars while real output is $ 90 then the GDP deflator (price index) is A) -110. B) Approximately 100. C) 110. D) 111.1. Show Answer Correct Answer: D) 111.1. 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