#1
Which of the following is a measure of the average level of prices in an economy?
CPI
ExplanationCPI measures average price level.
#2
What is the primary purpose of the Consumer Price Index (CPI)?
To measure changes in the cost of goods and services purchased by consumers over time
ExplanationCPI tracks changes in consumer costs over time.
#3
Which of the following is a measure of the overall level of economic activity in a country?
GDP
ExplanationGDP measures economic activity.
#4
Which of the following is a measure of the purchasing power of a currency?
Exchange rate
ExplanationExchange rate reflects currency's purchasing power.
#5
What is the primary goal of monetary policy in relation to inflation?
To keep inflation at a stable and low level
ExplanationMonetary policy aims to control inflation.
#6
Which of the following is NOT a component of the Producer Price Index (PPI)?
Unemployment rate
ExplanationPPI doesn't include unemployment rate.
#7
How does inflation affect the purchasing power of money?
Inflation decreases the purchasing power of money
ExplanationInflation reduces money's purchasing power.
#8
What does the term 'stagflation' refer to?
A period of high inflation and low unemployment
ExplanationStagflation is high inflation with low unemployment.
#9
Which of the following is NOT a cause of inflation?
Increase in production capacity
ExplanationIncreasing production capacity doesn't cause inflation.
#10
What is the relationship between inflation and interest rates?
Inflation and interest rates have an inverse relationship
ExplanationInverse relationship between inflation and interest rates.
#11
What does the term 'deflation' refer to?
A sustained decrease in the average price level of goods and services
ExplanationDeflation is a sustained decrease in prices.
#12
What is the formula for calculating the inflation rate using the Consumer Price Index (CPI)?
(Current CPI - Previous CPI) / Previous CPI
ExplanationInflation rate formula using CPI.
#13
What is the difference between 'real' and 'nominal' values in economics?
Real values account for inflation, while nominal values do not
ExplanationReal values adjust for inflation.
#14
How does hyperinflation differ from regular inflation?
Hyperinflation is a sudden and extreme increase in prices
ExplanationHyperinflation is rapid, extreme price increases.
#15
What effect does a decrease in the value of a currency have on imports and exports?
Decrease in imports, increase in exports
ExplanationCurrency devaluation decreases imports, increases exports.