Practice test

Inflation - Test Set 3

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

    Inflation can be temporarily checked by:
    1. Increasing wages
    2. Decreasing money supply
    3. Decreasing taxes
    4. None of these
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  2. Question 2

    Inflation occurs when aggregate supply is:
    1. More than aggregate demand
    2. Equal to aggregate demand
    3. Less than aggregate demand
    4. None of these
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  3. Question 3

    Which of the following brings out the CPI number for industrial workers?
    1. The RBI
    2. The Department of Economic Affairs
    3. The Labour Bureau
    4. The Department of Personnel and Training
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  4. Question 4

    With reference to inflation in India, which of the following statements is correct?
    1. Controlling inflation in India is the responsibility of the GOI only
    2. The RBI has no role in controlling inflation
    3. Decreased money circulation helps in controlling inflation
    4. Increased money circulation helps in controlling inflation
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  5. Question 5

    Which one of the following is likely to be the most inflationary in its effect?
    1. Repayment of public debt
    2. Borrowing from the public to finance a budget deficit
    3. Borrowing from banks to finance a budget deficit
    4. Creating new money to finance a budget deficit
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  6. Question 6

    Economic growth is usually coupled with—
    1. Deflation
    2. Inflation
    3. Stagflation
    4. Hyperinflation
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  7. Question 7

    Which one of the following is not a method to control inflation?
    1. Controlling demand
    2. Controlling money supply
    3. Reducing interest rates
    4. Rationing commodities
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  8. Question 8

    The most common measure of estimating inflation in India is—
    1. Price Index
    2. Wholesale Price Index (WPI)
    3. Consumer Price Index (CPI)
    4. Price Index of Index Goods
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  9. Question 9

    Inflation is best described as—
    1. High prices
    2. Increase in Price Index
    3. Increase in Purchasing Power
    4. Increase in price of particular goods
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  10. Question 10

    In an inflationary situation, which statement is false for a country?
    1. Profits rise faster than wages
    2. Value of money falls
    3. Cost of living rises
    4. Exports become more competitive
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  11. Question 11

    In which situation do wages and prices chase each other at a very high speed?
    1. Disinflation
    2. Reflation
    3. Stagflation
    4. Hyperinflation
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  12. Question 12

    Which of the following is called GDP Deflator?
    1. Ratio of nominal to real GDP
    2. Ratio of nominal to real GNP
    3. Ratio of nominal to real CPI
    4. Ratio of real to nominal GDP
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  13. Question 13

    Which of the following is represented by the ‘Lorenz Curve’?
    1. Employment
    2. Inflation
    3. Deflation
    4. Income Distribution
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  14. Question 14

    What is a moderate degree of controlled inflation called?
    1. Reflation
    2. Stagflation
    3. Hyperinflation
    4. Disinflation
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  15. Question 15

    A cause of inflation is:
    1. Increase in money supply
    2. Increase in money supply and fall in production
    3. Fall in production
    4. Decrease in money supply and fall in production
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  16. Question 16

    Inflation brings most benefit to which group?
    1. Government pensioners
    2. Creditors
    3. Savings Bank Account holders
    4. Debtors
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  17. Question 17

    The Flexible Inflation Targeting Framework (FITF) was introduced in India post the amendment of the Reserve Bank of India (RBI) Act, 1934 in ______.
    1. 2020
    2. 2016
    3. 2014
    4. 2010
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  18. Question 18

    Price control and rationing are direct control measures to check ______.
    1. Reflation
    2. Disinflation
    3. Deflation
    4. Inflation
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  19. Question 19

    Lack of financial discipline by the government can lead to ______.
    I. Excess expenditure
    II. Inflation
    1. Only II
    2. Only I
    3. I and II
    4. Neither I nor II
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  20. Question 20

    To combat inflation, what is the usual monetary policy stance adopted?
    1. Owlish
    2. Hewish
    3. Hicksian
    4. Contractionary
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