This quiz works best with JavaScript enabled. Home > Economics > Macroeconomics > Inflation > Inflation – Quiz 3 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Inflation Quiz 3 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Price stability occurs when A) Inflation is high. B) Prices are rising rapidly. C) Price level in an economy does not change much over time. D) There is significant deflation. Show Answer Correct Answer: C) Price level in an economy does not change much over time. 2. What are the two (2) main impacts of inflation? A) Economic and financial. B) Financial and psychological. C) Economic and social. D) Financial and social. Show Answer Correct Answer: C) Economic and social. 3. ..... is when the the buying power of money goes down and prices go up. A) Deflation. B) Fixed Income. C) Inflation. D) Market Basket. Show Answer Correct Answer: C) Inflation. 4. Which of the following is the proposition that changes in the money supply do not affect real variables? A) Monetary neutrality. B) Quantity theory of money. C) Velocity of money. D) Shoe leather costs. Show Answer Correct Answer: A) Monetary neutrality. 5. Inflation usually increases the most during what part of the Business Cycle? A) Trough. B) Boom. C) Upswing. D) Recession. Show Answer Correct Answer: B) Boom. 6. The country of Galaland produces the following products:2000Bananas-10 at $ 3Apples-10 at $ 2Bread-15 at $ 82001Bananas-10 at $ 5Apples-10 at $ 2Bread-20 at $ 8What is the real GDP for Galaland adjusted for inflation in 2001? A) 100. B) 210. C) 230. D) 200. Show Answer Correct Answer: B) 210. 7. Which economic change might contribute to both cost-push and demand-pull inflation? OCT/ NOV 2014 12 A) A a fall in the exchange rate. B) B a fall in the interest rate. C) C a rise in the productivity of industrial workers. D) D an improvement in the terms of trade. Show Answer Correct Answer: A) A a fall in the exchange rate. 8. Denise purchased a $ 1000 bond at the quoted price of 89 and 3/4. The bond pays interest at a rate of 4 and 3/4%. What is the annual yield? A) 5.35%. B) 5.5%. C) 5.29%. D) None of above. Show Answer Correct Answer: C) 5.29%. 9. What cause cost-push inflation? A) A decrease in demand. B) An increase in demand. C) A decrease in supply. D) An increase in supply. Show Answer Correct Answer: C) A decrease in supply. 10. Mild inflation is characterized by an increase in prices for ..... per year. a) 1-3%+b) 5-10% c) 15-20%d) 30-50% A) 5-10%. B) 30-50%. C) 1-3%. D) 15-20%. Show Answer Correct Answer: C) 1-3%. 11. Fisher effect is: A) One-for-one relation between the inflation rate and the nominal interest rate. B) One-for-one relation between the real and the nominal interest rate. C) One-for-one relation between the inflation rate and the real interest rate. D) None of the answers is correct. Show Answer Correct Answer: A) One-for-one relation between the inflation rate and the nominal interest rate. 12. Inflation caused by a rise in wage rates would be classified as.. A) Demand pull. B) Demand push. C) Cost push. D) Cost pull. Show Answer Correct Answer: C) Cost push. 13. A general increase in prices is called ..... A) Stagflation. B) Deflation. C) Impersonation. D) Inflation. Show Answer Correct Answer: D) Inflation. 14. Nominal wage adjusted for inflation A) RPI. B) Living wage. C) Real wage. D) Constant prices. Show Answer Correct Answer: C) Real wage. 15. Deflation is uncommon in the real world because A) Wages do not fall easily and firms fear price wars. B) Competitive markets keep prices from falling. C) Governments impose price floors. D) Firms will be unable to sell their products. Show Answer Correct Answer: A) Wages do not fall easily and firms fear price wars. 16. The total dollar value of goods and services produced by a nation, in a year A) Gross Domestic Product (GDP). B) Producer Price 'index (PPI). C) Consumer Price Index (CPI). D) Gross National Product (GNP). Show Answer Correct Answer: A) Gross Domestic Product (GDP). 17. Which of the following is most likely to be a cause of deflation A) A reduction in income tax. B) An increase in Oil prices. C) An improvement in technology. D) An increase in the supply of cash printed by the central bank. Show Answer Correct Answer: C) An improvement in technology. 18. State if the following statements is true? A) The consumer price index (CPI) measures the cost of all consumer goods and services. B) A 10% rate of inflation means that inflation is 10% per month. C) The inflation rate is calculated from a set of CPI figures. D) None of above. Show Answer Correct Answer: C) The inflation rate is calculated from a set of CPI figures. 19. Goods and services which are purchased in larger amounts have a larger impact on the price index calculation A) Price index. B) Base year. C) Representative basket. D) Weighting. Show Answer Correct Answer: D) Weighting. 20. Which among the following is exact opposite of inflation? A) Disinflation. B) Hyperinflation. C) Deflation. D) Stagflation. Show Answer Correct Answer: C) Deflation. 21. Changes in technology often eliminate one type of job. This represent what type of unemployment? A) Structural. B) Seasonal. C) Frictional. D) Cyclical. Show Answer Correct Answer: A) Structural. 22. The main reason why the price of goods and services increase overtime is because of A) Deflation. B) Government controls. C) Inflation. D) All of the above. Show Answer Correct Answer: C) Inflation. 23. Which one of the following is not a possible cause of demand-pull inflation? A) An increase in consumption spending. B) An increase in the oil price. C) An increase in investment spending. D) An increase in government spending. Show Answer Correct Answer: B) An increase in the oil price. 24. Which explanation best explains the effects of inflation? A) Consumers have more products to choose from. B) Inflation erodes (take away from) the purchasing power of the dollar. C) Inflation results in lower prices. D) Demand increases because prices are higher. Show Answer Correct Answer: B) Inflation erodes (take away from) the purchasing power of the dollar. 25. Mr. Kimoon wants to sell different styles of cap for this coming summer season. He was able to buy 30 caps from the supplier. He wants to use 65% mark-up. What is the quantity in this problem/ situation? A) Cap. B) 65%. C) 30 caps. D) Summer season. Show Answer Correct Answer: C) 30 caps. 26. Inflation is measured using the CPI index. This stands for: A) Consumer Private Inflation. B) Customer Price Investment. C) Customer Principal Index. D) Consumer Price Index. Show Answer Correct Answer: D) Consumer Price Index. 27. How does nominal GDP differ from Real GDP? A) Nominal GDP is expressed in base year prices. B) Real GDP is adjusted for inflation because it is expressed in base year prices. C) Real GDP does not reflect economic growth. D) Nominal and Real GDP are the same. Show Answer Correct Answer: B) Real GDP is adjusted for inflation because it is expressed in base year prices. 28. For the country of Mordor the Nominal Gross Domestic product was $ 8000B. After comparing the inflation rate to the year prior the GDP deflator was 125. What was the real gross domestic product for Mordor? A) $ 1, 000, 000B. B) $ 6, 400B. C) $ 6, 000B. D) $ 64B. Show Answer Correct Answer: B) $ 6, 400B. 29. Select all those who may "win" or "benefit" because of inflation: A) Savers. B) Those retired or on fixed incomes. C) Lenders. D) Borrowers. Show Answer Correct Answer: D) Borrowers. 30. Fill in the blank:When inflation is high the ..... of the pound decreases. A) Cost value. B) Purchasing power. C) Validity. D) Importance. Show Answer Correct Answer: B) Purchasing power. ← PreviousNext →Related QuizzesMacroeconomics QuizzesEconomics QuizzesInflation Quiz 1Inflation Quiz 2Inflation Quiz 4Inflation Quiz 5Inflation Quiz 6Inflation Quiz 7Inflation Quiz 8Inflation Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books