#1
What is inflation?
A decrease in the general price level of goods and services.
An increase in the general price level of goods and services.
A stable economic condition.
A decrease in the overall production of goods and services.
#2
Inflation is often measured using which of the following formulae?
Inflation Rate = (Current CPI - Previous CPI) / Previous CPI
Inflation Rate = (Current CPI / Previous CPI) * 100
Inflation Rate = Current CPI - Previous CPI
Inflation Rate = Current CPI / Previous CPI
#3
Which central bank is responsible for monetary policy in the United States?
Bank of England
European Central Bank (ECB)
Federal Reserve (Fed)
Bank of Japan
#4
Which of the following is a tool used by central banks to control the money supply and, indirectly, inflation?
Fiscal policy
Exchange rates
Monetary policy
Trade agreements
#5
What is the term for a situation where inflation is slowing down but still positive?
Stagflation
Hyperinflation
Deflation
Disinflation
#6
Which economic indicator is used to measure the overall health of an economy and includes the total value of all goods and services produced over a specific time period?
Gini coefficient
Gross Domestic Product (GDP)
Consumer Price Index (CPI)
Unemployment rate
#7
Which of the following is a measure of inflation that considers a basket of goods and services commonly consumed by a typical household?
GDP deflator
Consumer Price Index (CPI)
Producer Price Index (PPI)
Wholesale Price Index (WPI)
#8
What is demand-pull inflation?
Inflation caused by an increase in the cost of production.
Inflation caused by a decrease in consumer demand.
Inflation caused by excessive demand for goods and services.
Inflation caused by a decrease in the money supply.
#9
What is the Phillips curve in the context of inflation and unemployment?
Shows a direct relationship between inflation and unemployment.
Suggests an inverse relationship between inflation and unemployment.
Indicates no relationship between inflation and unemployment.
Depicts a quadratic relationship between inflation and unemployment.
#10
Which type of inflation is associated with rising costs of production such as wages and raw materials?
Cost-push inflation
Hyperinflation
Deflation
Stagflation
#11
Which factor is considered a lagging indicator in the context of inflation?
Stock market performance
Consumer spending
Unemployment rate
Producer Price Index (PPI)
#12
What is the term for a situation where the inflation rate is very low, often close to zero?
Hyperinflation
Stagflation
Deflation
Disinflation
#13
What is the term for a situation where inflation is high, but economic growth is slow or negative?
Stagflation
Hyperinflation
Deflation
Disinflation
#14
How does hyperinflation impact a country's economy?
Stimulates economic growth.
Leads to increased purchasing power.
Erodes the value of the national currency rapidly.
Reduces unemployment rates.
#15
What is the Fisher effect in the context of inflation and interest rates?
An increase in inflation leads to a decrease in nominal interest rates.
An increase in inflation leads to an increase in nominal interest rates.
A decrease in inflation leads to a decrease in real interest rates.
A decrease in inflation leads to a decrease in nominal interest rates.
#16
What role does the central bank play in controlling inflation?
Increasing government spending to boost demand.
Raising interest rates to reduce borrowing and spending.
Printing more money to stimulate economic activity.
Lowering taxes to encourage spending.
#17
What is the primary disadvantage of deflation for an economy?
Increased purchasing power of the currency.
Encourages investment and economic growth.
Debt becomes more burdensome, leading to reduced spending.
Stabilization of prices and wages.
#18
What is the Quantity Theory of Money in relation to inflation?
States that the quantity of money has no impact on inflation.
Argues that an increase in the money supply leads to an increase in prices.
Claims that inflation is solely determined by changes in production levels.
Suggests that inflation is inversely related to interest rates.
#19
What is the term for a policy aimed at reducing inflation even at the cost of lower economic growth and higher unemployment?
Inflation targeting
Monetary easing
Tight fiscal policy
Expansionary monetary policy
#20
Which economic school of thought believes that inflation is primarily caused by an increase in the money supply?
Monetarism
Keynesianism
Austrian economics
Classical economics