#1
Which of the following is a commonly used measure of inflation?
Consumer Price Index (CPI)
ExplanationCPI measures inflation.
#2
What does the Consumer Price Index (CPI) measure?
Changes in the cost of living over time
ExplanationCPI tracks cost of living changes.
#3
Inflation is typically expressed as a percentage increase in what?
Consumer prices
ExplanationInflation relates to consumer prices.
#4
What is the main limitation of using the Consumer Price Index (CPI) as a measure of inflation?
It does not account for changes in quality of goods and services.
ExplanationCPI doesn't consider quality changes.
#5
What is the purpose of using a base year in the calculation of price indices?
To provide a reference point for comparing current prices to historical prices.
ExplanationBase year aids in price comparison.
#6
Which of the following is an example of demand-pull inflation?
A surge in government spending
ExplanationGovernment spending causes demand-pull inflation.
#7
What is the difference between 'real' and 'nominal' values in the context of inflation?
Real values are adjusted for inflation, while nominal values are not.
ExplanationReal values account for inflation.
#8
Which price index includes all goods and services produced in an economy?
Gross Domestic Product (GDP) Deflator
ExplanationGDP Deflator encompasses all goods/services.
#9
How does hyperinflation impact an economy?
It erodes the value of money rapidly, leading to economic instability.
ExplanationHyperinflation rapidly devalues money.
#10
What role does the Producer Price Index (PPI) play in the measurement of inflation?
It measures the change in prices paid by producers for goods and services.
ExplanationPPI tracks producer prices.
#11
What is the difference between disinflation and deflation?
Disinflation refers to a decrease in the inflation rate, while deflation is a general decrease in prices.
ExplanationDisinflation lowers inflation rate, deflation lowers prices.