Online Test — Inflation
15 Questions • 15 min • Chapter MCQ
15:00
Question 1 of 15
Inflation is a sustained rise in the:
Price of one good
General price level
Money supply only
Tax rate
Explanation: Inflation is a sustained rise in the general price level.
Question 2 of 15
Inflation reduces the ____ of money.
Weight
Purchasing power
Colour
Size
Explanation: Inflation lowers the purchasing power of money.
Question 3 of 15
A slow, mild rise in prices is:
Creeping inflation
Hyperinflation
Deflation
Galloping inflation
Explanation: A mild, slow rise is creeping inflation.
Question 4 of 15
An extremely rapid, out-of-control price rise is:
Creeping inflation
Hyperinflation
Disinflation
Deflation
Explanation: An out-of-control rise is hyperinflation.
Question 5 of 15
A sustained fall in the general price level is:
Inflation
Deflation
Disinflation
Stagflation
Explanation: A falling price level is deflation.
Question 6 of 15
High inflation together with stagnation/unemployment is:
Deflation
Stagflation
Disinflation
Creeping inflation
Explanation: Inflation plus stagnation is stagflation.
Question 7 of 15
'Too much money chasing too few goods' is:
Cost-push inflation
Demand-pull inflation
Deflation
Disinflation
Explanation: Excess demand causing inflation is demand-pull.
Question 8 of 15
Inflation caused by rising input costs (wages, oil) is:
Demand-pull
Cost-push
Deflation
Disinflation
Explanation: Rising costs cause cost-push inflation.
Question 9 of 15
During inflation, who generally loses?
Borrowers
Fixed-income earners and lenders
Businessmen
Holders of land
Explanation: Fixed-income earners and lenders lose to inflation.
Question 10 of 15
During inflation, who generally gains?
Lenders
Borrowers
Pensioners
Savers in cash
Explanation: Borrowers gain by repaying in cheaper money.
Question 11 of 15
To control inflation, the RBI would raise the:
Repo rate and CRR
Subsidies
Buffer stocks
Wages
Explanation: Raising the repo rate and CRR tightens credit.
Question 12 of 15
A fiscal measure to control inflation is to:
Cut public spending and raise taxes
Lower the repo rate
Print more notes
Increase the deficit
Explanation: Less spending and higher taxes reduce demand.
Question 13 of 15
Releasing buffer stocks of food is a ____ measure.
Monetary
Supply-side
Tax
Deficit
Explanation: Raising supply via buffer stocks is a supply-side measure.
Question 14 of 15
Demand-pull inflation is best fought by:
Reducing aggregate demand
Increasing demand
Printing money
Raising wages
Explanation: Reducing demand cools demand-pull inflation.
Question 15 of 15
Disinflation means the inflation rate is:
Rising
Slowing (prices still rise, more slowly)
Negative
Zero forever
Explanation: Disinflation is a slowing of the inflation rate.