Inflation is defined as:
A) A decrease in the general price level of goods and services
B) An increase in the general price level of goods and services
C) A decrease in money supply
D) An increase in money supply without a corresponding increase in demand
Which of the following is a primary cause of demand-pull inflation?
A) Excessive supply of goods
B) Increased consumer demand and government spending
C) Rising interest rates
D) Higher labor costs
Cost-push inflation is caused by:
A) Increased wages and raw material costs
B) Higher consumer demand
C) Excessive government spending
D) Increase in technological advancements
Which of the following is a potential effect of inflation?
A) Increased purchasing power
B) Reduced income inequality
C) Decreased savings value
D) Stable price levels for goods
Hyperinflation refers to:
A) A moderate and controlled rise in prices
B) An increase in prices during times of war
C) Extremely high and typically accelerating inflation
D) A sudden and sharp decrease in inflation
Which of the following is most likely to be a consequence of inflation?
A) Increased cost of living
B) Increased purchasing power of money
C) Stability in wages
D) Lower interest rates
Which of the following is a key tool for controlling inflation?
A) Reducing taxes
B) Increasing government spending
C) Raising interest rates
D) Lowering interest rates
Which of the following inflation types is typically caused by increased production costs?
A) Demand-pull inflation
B) Cost-push inflation
C) Built-in inflation
D) Imported inflation
The purchasing power of money is most affected by:
A) Unemployment rate
B) Interest rates
C) Inflation
D) Tax rates
Which of the following would most likely cause an increase in inflation?
A) Decreased consumer spending
B) Decreased oil prices
C) Increase in the money supply
D) Reduced government expenditure
Which of the following is a likely effect of deflation?
A) Increased unemployment
B) Increased investment in the economy
C) Rising wages and salaries
D) Decrease in the value of the currency
Inflation caused by increased consumer demand is known as:
A) Built-in inflation
B) Demand-pull inflation
C) Cost-push inflation
D) Structural inflation
Which of the following is a consequence of high inflation?
A) Higher real wages
B) Lower borrowing costs
C) Reduced savings value
D) Increased stability in investment returns
Which of the following measures would most likely control demand-pull inflation?
A) Lowering interest rates
B) Increasing government expenditure
C) Reducing taxes
D) Raising interest rates
Which of the following policies can be used to combat cost-push inflation?
A) Wage and price controls
B) Increased government spending
C) Reduction in tax rates
D) Reducing interest rates
Built-in inflation, also known as wage-price inflation, occurs when:
A) Consumers have too much money to spend
B) Prices rise due to supply shortages
C) Workers demand higher wages, which leads to higher prices
D) Interest rates are too low
Which of the following can be a negative effect of inflation on businesses?
A) Increased demand for goods and services
B) Higher production costs
C) Lower interest rates
D) Increased profits
Which of the following is a measure taken by central banks to control inflation?
A) Increasing the money supply
B) Raising interest rates
C) Lowering taxes
D) Increasing government spending
Inflation that results from higher costs of imported goods is known as:
A) Built-in inflation
B) Demand-pull inflation
C) Imported inflation
D) Structural inflation
What is the relationship between inflation and unemployment known as?
A) Phillips curve
B) Gresham’s law
C) Okun’s law
D) Laffer curve
Which of the following would most likely reduce inflation?
A) Increased government borrowing
B) A higher interest rate set by the central bank
C) Increased consumer demand
D) Expansionary fiscal policies
Which of the following is an example of a control measure for inflation in an economy?
A) Printing more money
B) Increasing tariffs on imports
C) Raising taxes and cutting government spending
D) Subsidizing wages and salaries
What happens to the value of money during inflation?
A) It increases
B) It decreases
C) It remains constant
D) It becomes stable
Which of the following is most likely to be the cause of hyperinflation?
A) Increased consumer confidence
B) Excessive money printing by the government
C) Stable wage levels
D) Decreased government spending
Which of the following is an effect of inflation on fixed-income earners?
A) Increase in purchasing power
B) Decrease in purchasing power
C) Stability in income
D) Increased savings value
Inflation targeting is:
A) A monetary policy strategy aimed at reducing inflation to a specific target
B) A fiscal policy strategy aimed at increasing inflation
C) A method for increasing demand in the economy
D) A policy to reduce government debt
Which of the following can be a direct effect of persistent inflation on consumers?
A) Increased real wages
B) Reduced standard of living
C) Lower cost of borrowing
D) Stable prices for goods and services
Which of the following would most likely lead to a reduction in inflation in the long run?
A) Increased money supply
B) Decreased production costs
C) Increased government borrowing
D) Higher wages for workers
Which of the following is a consequence of sustained high inflation on the economy?
A) Increased investment and economic growth
B) Higher cost of living for consumers
C) Increased savings rate
D) Reduction in wage inequality
