This quiz works best with JavaScript enabled. Home > Macroeconomics > Inflation > Inflation – Quiz 4 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Inflation Quiz 4 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Price stability occurs when A) Prices are rising rapidly. B) Inflation is high. C) There is significant deflation. D) Price level in an economy does not change much over time. Show Answer Correct Answer: D) 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) Inflation. C) Fixed Income. D) Market Basket. Show Answer Correct Answer: B) Inflation. 4. Which of the following is the proposition that changes in the money supply do not affect real variables? A) Velocity of money. B) Quantity theory of money. C) Monetary neutrality. D) Shoe leather costs. Show Answer Correct Answer: C) Monetary neutrality. 5. Inflation usually increases the most during what part of the Business Cycle? A) Upswing. B) Recession. C) Trough. D) Boom. Show Answer Correct Answer: D) 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) 210. B) 100. C) 200. D) 230. Show Answer Correct Answer: A) 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) 1-3%. B) 5-10%. C) 15-20%. D) 30-50%. Show Answer Correct Answer: A) 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) Inflation. B) Stagflation. C) Deflation. D) Impersonation. Show Answer Correct Answer: A) Inflation. 14. Nominal wage adjusted for inflation A) Living wage. B) RPI. 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) Gross National Product (GNP). C) Consumer Price Index (CPI). D) Producer Price 'index (PPI). Show Answer Correct Answer: A) Gross Domestic Product (GDP). 17. Which of the following is most likely to be a cause of deflation A) An increase in the supply of cash printed by the central bank. B) An increase in Oil prices. C) A reduction in income tax. D) An improvement in technology. Show Answer Correct Answer: D) 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) Base year. B) Price index. C) Weighting. D) Representative basket. Show Answer Correct Answer: C) Weighting. 20. Which among the following is exact opposite of inflation? A) Stagflation. B) Disinflation. C) Hyperinflation. D) Deflation. Show Answer Correct Answer: D) Deflation. ← PreviousNext →Related QuizzesMacroeconomics QuizzesInflation Quiz 1Inflation Quiz 2Inflation Quiz 3Inflation Quiz 5Inflation Quiz 6Inflation Quiz 7Inflation Quiz 8Inflation Quiz 9Inflation Quiz 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books