Vidaara.orgClass 12 · Mathematics
CodeVID-M12-WS
Inflation — Practice Worksheet
Name: ____________________
Roll No.: __________
Date: ____________
General Instructions
- All questions are compulsory.
- Choose the correct option (A, B, C or D) for each question.
- The answer key is at the end — try the paper first!
Section A — Multiple Choice (1 mark each)
15 × 1 = 15 marks
1.
Inflation is a sustained rise in the:
- A.Price of one good
- B.General price level
- C.Money supply only
- D.Tax rate
2.
Inflation reduces the ____ of money.
- A.Weight
- B.Purchasing power
- C.Colour
- D.Size
3.
A slow, mild rise in prices is:
- A.Creeping inflation
- B.Hyperinflation
- C.Deflation
- D.Galloping inflation
4.
An extremely rapid, out-of-control price rise is:
- A.Creeping inflation
- B.Hyperinflation
- C.Disinflation
- D.Deflation
5.
A sustained fall in the general price level is:
- A.Inflation
- B.Deflation
- C.Disinflation
- D.Stagflation
6.
High inflation together with stagnation/unemployment is:
- A.Deflation
- B.Stagflation
- C.Disinflation
- D.Creeping inflation
7.
'Too much money chasing too few goods' is:
- A.Cost-push inflation
- B.Demand-pull inflation
- C.Deflation
- D.Disinflation
8.
Inflation caused by rising input costs (wages, oil) is:
- A.Demand-pull
- B.Cost-push
- C.Deflation
- D.Disinflation
9.
During inflation, who generally loses?
- A.Borrowers
- B.Fixed-income earners and lenders
- C.Businessmen
- D.Holders of land
10.
During inflation, who generally gains?
- A.Lenders
- B.Borrowers
- C.Pensioners
- D.Savers in cash
11.
To control inflation, the RBI would raise the:
- A.Repo rate and CRR
- B.Subsidies
- C.Buffer stocks
- D.Wages
12.
A fiscal measure to control inflation is to:
- A.Cut public spending and raise taxes
- B.Lower the repo rate
- C.Print more notes
- D.Increase the deficit
13.
Releasing buffer stocks of food is a ____ measure.
- A.Monetary
- B.Supply-side
- C.Tax
- D.Deficit
14.
Demand-pull inflation is best fought by:
- A.Reducing aggregate demand
- B.Increasing demand
- C.Printing money
- D.Raising wages
15.
Disinflation means the inflation rate is:
- A.Rising
- B.Slowing (prices still rise, more slowly)
- C.Negative
- D.Zero forever
Section B — Challenge / Olympiad (2 marks each)
10 × 2 = 20 marks
16.
After a sharp rise in global crude-oil prices, transport and production costs climb and the price level rises. This is:
- A.Cost-push inflation
- B.Demand-pull inflation
- C.Deflation
- D.Disinflation
17.
A retired person on a fixed pension finds it harder to manage during inflation because:
- A.Their fixed income buys fewer goods as prices rise
- B.Their income rises automatically
- C.Prices fall
- D.They are a borrower
18.
A businessman who borrowed heavily before a period of high inflation effectively benefits because the loan is repaid in money that is:
- A.Worth less than when it was borrowed
- B.Worth more
- C.Tax-free
- D.Doubled
19.
To fight clear demand-pull inflation, the most appropriate combination is:
- A.Tight monetary policy plus contractionary fiscal policy
- B.Easy money plus more spending
- C.Lower taxes and lower repo rate
- D.Print money
20.
Mild creeping inflation is sometimes seen as helpful because it can:
- A.Encourage producers to invest and produce more
- B.Destroy the currency
- C.Cause hyperinflation at once
- D.Stop all trade
21.
A government importing onions and releasing wheat from buffer stocks during a price spike is using:
- A.Supply-side measures
- B.Monetary policy
- C.A tax cut
- D.Devaluation
22.
Why can cost-push inflation be harder to cure with tight monetary policy alone?
- A.It comes from supply costs, not excess demand, so cutting demand may just cause unemployment
- B.It is always demand-driven
- C.Monetary policy is illegal
- D.Prices never change
23.
Holding gold and land during high inflation tends to protect wealth because their value:
- A.Rises with the general price level (real assets)
- B.Falls to zero
- C.Is fixed in money terms
- D.Becomes a debt
24.
The Reserve Bank's main goal in setting interest rates is usually described as keeping inflation:
- A.Low and stable
- B.As high as possible
- C.Exactly zero always
- D.Negative
25.
Inflation 'redistributes' income, which means it:
- A.Shifts real income from some groups (lenders, fixed-income earners) to others (borrowers, traders)
- B.Gives everyone equal income
- C.Removes all income
- D.Only affects the government
Answer Key
Section A — Multiple Choice (1 mark each)
- (B) General price level
- (B) Purchasing power
- (A) Creeping inflation
- (B) Hyperinflation
- (B) Deflation
- (B) Stagflation
- (B) Demand-pull inflation
- (B) Cost-push
- (B) Fixed-income earners and lenders
- (B) Borrowers
- (A) Repo rate and CRR
- (A) Cut public spending and raise taxes
- (B) Supply-side
- (A) Reducing aggregate demand
- (B) Slowing (prices still rise, more slowly)
Section B — Challenge / Olympiad (2 marks each)
- (A) Cost-push inflation
- (A) Their fixed income buys fewer goods as prices rise
- (A) Worth less than when it was borrowed
- (A) Tight monetary policy plus contractionary fiscal policy
- (A) Encourage producers to invest and produce more
- (A) Supply-side measures
- (A) It comes from supply costs, not excess demand, so cutting demand may just cause unemployment
- (A) Rises with the general price level (real assets)
- (A) Low and stable
- (A) Shifts real income from some groups (lenders, fixed-income earners) to others (borrowers, traders)
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