Practice test

Inflation - Test Set 2

Review 20 exam-focused questions with detailed explanations, then start the interactive test when you are ready.

20 questions

Questions and explanations

  1. Question 1

    In which situation, wages and prices chase each other at a very quick speed?
    1. Disinflation
    2. Reflation
    3. Stagflation
    4. Hyper-inflation
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  2. Question 2

    What is moderate degree of controlled inflation called as?
    1. Reflation
    2. Stagflation
    3. Hyper-inflation
    4. Disinflation
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  3. Question 3

    The relationship between the value of money and the price level in an economy is:
    1. Direct
    2. Inverse
    3. Proportional
    4. Stable
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  4. Question 4

    The result of cost-push inflation is:
    1. Hindrances in economic development increase
    2. Adverse effect on Balance of Payment
    3. Hindrance in development
    4. All of the above
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  5. Question 5

    During periods of inflation, tax rates should:
    1. Increase
    2. Decrease
    3. Remain constant
    4. Fluctuate
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  6. Question 6

    Which of the following groups suffer the most from inflation?
    1. Debtors
    2. Creditors
    3. Business Class
    4. Holders of Real Assets
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  7. Question 7

    Inflation can be checked by:
    1. Increasing exports
    2. Increasing money supply
    3. Increasing government expenditure
    4. Decreasing money supply
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  8. Question 8

    Government securities are considered liquid because they are:
    1. Backed by the government treasury
    2. Convertible into other types of saving deposits
    3. Quickly and easily marketable
    4. Stable in value
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  9. Question 9

    Inflation is caused by:
    1. Increase in supply of goods
    2. Increase in cash with the government
    3. Decrease in money supply
    4. Increase in money supply
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  10. Question 10

    The Central Statistical Organisation (CSO) provides data under a new revised series with the base year as:
    1. 1960-61
    2. 2004-05
    3. 1980-81
    4. 1990-91
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  11. Question 11

    Which is NOT a measure to check inflation?
    1. Increase in consumption
    2. Increase in production
    3. Reduction in deficit financing
    4. Taxation measures
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  12. Question 12

    A consequence of inflationary price rise is:
    1. Obstacle in development
    2. Increase in economic inequalities
    3. Adverse effect on balance of payment
    4. All of these
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  13. Question 13

    A supply-side measure to control inflation is:
    1. Reducing public expenditure
    2. Price control via Public Distribution System (PDS)
    3. Higher taxation
    4. Credit control
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  14. Question 14

    'Galloping Inflation' is also known as:
    1. Walking Inflation
    2. Running Inflation
    3. Hyper Inflation
    4. Creeping Inflation
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  15. Question 15

    The Great Depression occurred during:
    1. 1914-18
    2. 1929-34
    3. 1939-45
    4. 1922-26
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  16. Question 16

    The worldwide Great Depression took place in:
    1. 1936
    2. 1929
    3. 1928
    4. 1930
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  17. Question 17

    The Consumer Price Index reflects:
    1. The standard of living
    2. Inflation in consumer goods prices
    3. Increasing per capita income
    4. Economic growth
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  18. Question 18

    Forced Savings refer to:
    1. Reduced consumption due to price rises
    2. Income/wealth taxes
    3. Compulsory deposits for taxpayers
    4. Provident fund contributions
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  19. Question 19

    When too much money chases too few goods, the situation is:
    1. Deflation
    2. Inflation
    3. Recession
    4. Stagflation
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  20. Question 20

    Which group suffers most from inflation?
    1. Debtors
    2. Creditors
    3. Business class
    4. Holders of real assets
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