#1
Which of the following best defines 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 price level of goods and services
A decrease in the overall demand for goods and services
#2
Which of the following accurately describes the relationship between inflation and wages?
Inflation erodes the real value of wages over time
Inflation has no impact on wages
Inflation causes wages to increase at the same rate
Inflation decreases wages in the short term
#3
What is the difference between nominal and real interest rates?
Nominal interest rates are adjusted for inflation, while real interest rates are not.
Real interest rates are adjusted for inflation, while nominal interest rates are not.
Nominal interest rates include both inflation and economic growth, while real interest rates do not.
Real interest rates are only applicable to short-term loans, while nominal interest rates apply to long-term loans.
#4
What is the relationship between inflation and the purchasing power of money?
Inflation increases the purchasing power of money
Inflation decreases the purchasing power of money
Inflation has no impact on the purchasing power of money
Inflation stabilizes the purchasing power of money
#5
What is the term used to describe a situation where inflation is coupled with a decline in real output and employment?
Deflation
Hyperinflation
Stagflation
Cost-push inflation
#6
What is the primary cause of demand-pull inflation?
Decrease in the money supply
Decrease in consumer spending
Increase in aggregate demand
Increase in production capacity
#7
Which of the following is NOT a consequence of hyperinflation?
Decrease in savings
Increase in investment
Reduced purchasing power
Economic instability
#8
What is the Phillips curve?
A graphical representation of the relationship between inflation and unemployment
A model that predicts changes in the stock market
A theory explaining the behavior of interest rates
A measure of income inequality
#9
Which of the following is an example of cost-push inflation?
An increase in government spending
An increase in wages
A decrease in the money supply
A decrease in aggregate demand
#10
Which of the following is a possible consequence of hyperinflation?
Increase in the value of currency
Decrease in unemployment rate
Loss of confidence in the currency
Stable economic growth
#11
What is the difference between cost-push and demand-pull inflation?
Cost-push inflation is caused by increases in production costs, while demand-pull inflation is caused by excess demand.
Cost-push inflation is caused by excess demand, while demand-pull inflation is caused by increases in production costs.
Cost-push inflation is caused by decreases in production costs, while demand-pull inflation is caused by excess demand.
Cost-push inflation is caused by excess supply, while demand-pull inflation is caused by decreases in production costs.
#12
What is the Fisher effect?
The relationship between inflation and unemployment
The relationship between real and nominal interest rates
The relationship between inflation and interest rates
The relationship between inflation and exchange rates
#13
How does deflation differ from disinflation?
Deflation is a decrease in the rate of inflation, whereas disinflation is a decrease in the general price level
Deflation is a decrease in the general price level, whereas disinflation is an increase in the rate of inflation
Deflation is an increase in the general price level, whereas disinflation is a decrease in the rate of inflation
Deflation is an increase in the rate of inflation, whereas disinflation is a decrease in the general price level
#14
What effect does anticipated inflation have on the economy?
It increases uncertainty and reduces investment
It stabilizes prices and boosts consumer confidence
It decreases interest rates and stimulates borrowing
It encourages saving and investment
#15
What is the role of the central bank in controlling inflation?
To increase government spending
To decrease interest rates
To increase the money supply
To implement contractionary monetary policy
#16
What effect does high inflation typically have on borrowers and lenders?
Borrowers benefit as the real value of their debt decreases, while lenders lose out.
Lenders benefit as the real value of their debt decreases, while borrowers lose out.
Both borrowers and lenders benefit equally.
Both borrowers and lenders suffer losses.
#17
Which of the following is an example of built-in inflation?
An increase in government spending
An increase in the money supply
A rise in wages due to collective bargaining agreements
A decrease in production costs