This quiz works best with JavaScript enabled. Home > Economics > Macroeconomics > Inflation > Inflation – Quiz 2 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Inflation Quiz 2 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Ben's savings from his part-time job are in a savings account paying a fixed rate of interest. A) Harmed from unanticipated inflation. B) Benefits from unanticipated inflation. C) Uncertain. D) None of above. Show Answer Correct Answer: A) Harmed from unanticipated inflation. 2. Buying an item that was not planned for or buying without thinking is known as ..... A) Getting value for money. B) Consumer choices. C) Spending spree. D) Impulse buying. Show Answer Correct Answer: D) Impulse buying. 3. If CPI goes from 100 to 300, what happened to your purchasing power? A) Increase. B) Decrease. C) No change. D) None of above. Show Answer Correct Answer: B) Decrease. 4. According to the Demand-Pull Theory, inflation is caused by ..... A) Producers raising prices to make up for increased costs. B) People demanding too much of a good or service. C) Too much money being in circulation. D) The market basket being full. Show Answer Correct Answer: B) People demanding too much of a good or service. 5. Which of the following measure of inflation includes mortage costs? A) RPI. B) CPIH. C) CPI. D) RPIH. Show Answer Correct Answer: A) RPI. 6. A decrease in general price level is called ..... A) Low inflation. B) Disinflation. C) Hyperinflation. D) Deflation. Show Answer Correct Answer: D) Deflation. 7. A ..... is a hypothetical set of consumer purchases of goods and services. A) Producer Price Index (PPI). B) Aggregate Price Level. C) Consumer Price Index (CPI). D) Market Basket. Show Answer Correct Answer: D) Market Basket. 8. The primary way an investor earns a return from bonds is ..... A) Dividends. B) Stock dividends. C) Interest. D) All of these. Show Answer Correct Answer: C) Interest. 9. Things that you must have in order to survive. A) Needs. B) Wants. C) Inspiration. D) Goals. Show Answer Correct Answer: A) Needs. 10. This is the annual percentage return realized on an investment. A) Real rate. B) Investment rate. C) Nominal rate. D) Interest rate. Show Answer Correct Answer: A) Real rate. 11. An increase in aggregate demand is more likely to lead to demand-pull inflation if: A) Aggregate supply is unit elastic. B) Aggregate supply is relatively elastic. C) Aggregate supply is perfectly inelastic. D) Aggregate supply is perfectly elastic. Show Answer Correct Answer: C) Aggregate supply is perfectly inelastic. 12. This is a collection of goods purchased by a city dweller to determine the level of inflation A) Demand Pull. B) Cost Push. C) Market Basket. D) Good Basket. Show Answer Correct Answer: C) Market Basket. 13. The average level of prices based on a range of prices A) Base year. B) Weighting. C) Price index. D) Representative basket. Show Answer Correct Answer: C) Price index. 14. Which of the following MUST decline in order to slow demand-pull inflation? A) Production capacity. B) Spending. C) Taxes. D) None of above. Show Answer Correct Answer: B) Spending. 15. To reduce the rate of demand-pull inflation, an appropriate policy would be A) Higher taxes. B) Lower taxes. C) Higher government spending. D) Lower interest rates. Show Answer Correct Answer: A) Higher taxes. 16. What is the term for the lowest possible level of unemployment? A) Perfect employment. B) Full employment. C) Peak employment. D) Cyclical employment. Show Answer Correct Answer: B) Full employment. 17. Combination of slow growth and fast-rising prices A) Hyperinflation. B) Demand pull. C) Cost plus. D) Staglfation. Show Answer Correct Answer: D) Staglfation. 18. Which of the following is NOT one of the components of Gross Domestic Product (GDP)? A) Government spending. B) Investment. C) Producer Price Index. D) Consumption. Show Answer Correct Answer: C) Producer Price Index. 19. Choose appropriate adverbs to the word "inflation" : A) Inarticulately, frantically, poorly. B) Partially, enormously, considerably. C) Remedially, restoratively, therapeutically, curatively. D) None of above. Show Answer Correct Answer: B) Partially, enormously, considerably. 20. If inflation outpaces wages ..... A) People will have more purchasing power. B) There will be no change. C) The real income of people will decrease. D) The real income of people will increase. Show Answer Correct Answer: C) The real income of people will decrease. 21. Who is least likely hurt by inflation? A) A retiree on a fixed income. B) Owner of a business. C) A person that lives on a pension. D) A bank that loaned money at a fixed interest rate. Show Answer Correct Answer: B) Owner of a business. 22. What does GDP mean? A) The value of all of the final goods and services produced in a country in a given year. B) All of the good people in a country. C) All of the groceries sold in a country in a given year. D) None of above. Show Answer Correct Answer: A) The value of all of the final goods and services produced in a country in a given year. 23. What is the result from "Stagflation" ? A) Raising employment rate. B) Economic growth is like a "snail". C) General Price level decreases. D) None. Show Answer Correct Answer: B) Economic growth is like a "snail". 24. What would increase both demand-pull and cost-push inflation? OCT/NOV 2013 12 A) A an appreciation of a country's currency. B) C an increase in the level of its import tariffs. C) D an increase in the price of oil. D) B an increase in the cost of borrowing. Show Answer Correct Answer: B) C an increase in the level of its import tariffs. 25. Most countries try to maintain an inflation rate of ..... per year. A) Four to five percent. B) Six to seven percent. C) Two to three percent. D) One percent or less. Show Answer Correct Answer: C) Two to three percent. 26. A general fall in the level of prices over time A) Deflation. B) Inflation. C) Inflation rate. D) Hyperinflation. Show Answer Correct Answer: A) Deflation. 27. What may cause cost-push inflation? MAY/JUNE 2010 11 A) A an appreciation of the exchange rate. B) C an increase in labour productivity. C) B a higher level of consumption. D) D an increase in trade union power. Show Answer Correct Answer: D) D an increase in trade union power. 28. Demand-pull inflation often occurs because a government A) Is not printing enough money. B) Is creating too few regulation. C) Prints too much money. D) None of the above. Show Answer Correct Answer: C) Prints too much money. 29. A peak in business cycle is indicated by ..... unemployment and ..... output. A) Lower ; higher. B) Higher ; lower. C) Increasing ; decreasing. D) Decreasing ; increasing. Show Answer Correct Answer: A) Lower ; higher. 30. Having a desire to possess or do something is called a/an ..... A) Want. B) Need. C) Urge. D) Necessity. Show Answer Correct Answer: A) Want. ← PreviousNext →Related QuizzesMacroeconomics QuizzesEconomics QuizzesInflation Quiz 1Inflation Quiz 3Inflation Quiz 4Inflation Quiz 5Inflation Quiz 6Inflation Quiz 7Inflation Quiz 8Inflation Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books