Practice test

Inflation - Test Set 4

Review 12 exam-focused questions with detailed explanations, then start the interactive test when you are ready.

12 questions

Questions and explanations

  1. Question 1

    Which statement is true regarding disinflation?
    1. Inflation due to only a few commodities.
    2. Overall decrease in prices.
    3. Decrease in the rate of inflation.
    4. Sudden sharp price decrease.
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  2. Question 2

    A sustained rise in the general price level is called _____
    1. Disinflation
    2. Inflation
    3. Deflation
    4. Stagflation
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  3. Question 3

    Lack of money supply compared to goods/services leads to ______.
    1. Hyperinflation
    2. Deflation
    3. Devaluation
    4. Inflation
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  4. Question 4

    In India, inflation is measured by ______.
    1. Wholesale Price Index
    2. Consumer Price Index
    3. GDP
    4. Both A and B
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  5. Question 5

    The period of high inflation, low growth, and high unemployment is termed ______.
    1. Stagnation
    2. Stagflation
    3. Reflation
    4. Take-off stage
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  6. Question 6

    Which measure is the RBI most likely to take to combat inflation?
    1. Increase repo rate
    2. Increase money supply
    3. Decrease cash reserve ratio
    4. Only A
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  7. Question 7

    Working age population in India:
    1. 20-64 years
    2. 16-65 years
    3. 18-64 years
    4. 15-59 years
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  8. Question 8

    The process of curing inflation by reducing money supply is called:
    1. Cost -push inflation
    2. Demand - pull inflation
    3. Disinflation
    4. None
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  9. Question 9

    The term stagflation refers to a situation where:
    1. Growth has no relation with the change in prices
    2. Rate of growth and prices both are decreasing
    3. Rate of growth in faster than the rate of price increase
    4. Rate of growth is slower than the rate of price increase
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  10. Question 10

    Cheap money means:
    1. Low rate interest
    2. Low level of Savings
    3. Low level income
    4. All of these
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  11. Question 11

    In a period of inflation and price rise the supply of money remains:
    1. The same
    2. Increases
    3. Decreases
    4. Increase or decrease both
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  12. Question 12

    Stagflation is a situation of:
    1. Stagflation and deflation
    2. Stagflation and recession
    3. Stagflation and inflation
    4. Stagflation and recovery
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