This quiz works best with JavaScript enabled. Home > Macroeconomics > Inflation > Inflation – Quiz 3 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Inflation Quiz 3 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. An increase in aggregate demand is more likely to lead to demand-pull inflation if: A) Aggregate supply is perfectly elastic. B) Aggregate supply is perfectly inelastic. C) Aggregate supply is unit elastic. D) Aggregate supply is relatively elastic. Show Answer Correct Answer: B) Aggregate supply is perfectly inelastic. 2. 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. 3. The average level of prices based on a range of prices A) Base year. B) Price index. C) Weighting. D) Representative basket. Show Answer Correct Answer: B) Price index. 4. 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. 5. To reduce the rate of demand-pull inflation, an appropriate policy would be A) Lower interest rates. B) Higher government spending. C) Higher taxes. D) Lower taxes. Show Answer Correct Answer: C) Higher taxes. 6. What is the term for the lowest possible level of unemployment? A) Full employment. B) Cyclical employment. C) Perfect employment. D) Peak employment. Show Answer Correct Answer: A) Full employment. 7. Combination of slow growth and fast-rising prices A) Hyperinflation. B) Demand pull. C) Cost plus. D) Staglfation. Show Answer Correct Answer: D) Staglfation. 8. Which of the following is NOT one of the components of Gross Domestic Product (GDP)? A) Consumption. B) Producer Price Index. C) Government spending. D) Investment. Show Answer Correct Answer: B) Producer Price Index. 9. 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. 10. If inflation outpaces wages ..... A) The real income of people will increase. B) There will be no change. C) The real income of people will decrease. D) People will have more purchasing power. Show Answer Correct Answer: C) The real income of people will decrease. 11. Who is least likely hurt by inflation? A) Owner of a business. B) A retiree on a fixed income. C) A bank that loaned money at a fixed interest rate. D) A person that lives on a pension. Show Answer Correct Answer: A) Owner of a business. 12. 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. 13. 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". 14. What would increase both demand-pull and cost-push inflation? OCT/NOV 2013 12 A) A an appreciation of a country's currency. B) B an increase in the cost of borrowing. C) C an increase in the level of its import tariffs. D) D an increase in the price of oil. Show Answer Correct Answer: C) C an increase in the level of its import tariffs. 15. Most countries try to maintain an inflation rate of ..... per year. A) One percent or less. B) Two to three percent. C) Four to five percent. D) Six to seven percent. Show Answer Correct Answer: B) Two to three percent. 16. A general fall in the level of prices over time A) Inflation. B) Inflation rate. C) Deflation. D) Hyperinflation. Show Answer Correct Answer: C) Deflation. 17. What may cause cost-push inflation? MAY/JUNE 2010 11 A) A an appreciation of the exchange rate. B) B a higher level of consumption. C) C an increase in labour productivity. D) D an increase in trade union power. Show Answer Correct Answer: D) D an increase in trade union power. 18. 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. 19. A peak in business cycle is indicated by ..... unemployment and ..... output. A) Higher ; lower. B) Lower ; higher. C) Decreasing ; increasing. D) Increasing ; decreasing. Show Answer Correct Answer: B) Lower ; higher. 20. Having a desire to possess or do something is called a/an ..... A) Urge. B) Need. C) Necessity. D) Want. Show Answer Correct Answer: D) Want. ← PreviousNext →Related QuizzesMacroeconomics QuizzesInflation Quiz 1Inflation Quiz 2Inflation Quiz 4Inflation Quiz 5Inflation Quiz 6Inflation Quiz 7Inflation Quiz 8Inflation Quiz 9Inflation Quiz 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books