Inflation

The condition of a continually rising price level is defined as

• stagflation

• stagnation

• disinflation

• inflation

At first cut, the simple solution to fighting inflation is

• reducing the growth rate of the money supply.

• limiting the number of terms that politicians can serve in elective office.

• returning the economy to barter by prohibiting the use of fiat money.

• to impose price controls on businesses that attempt to raise prices.

Inflation occurs whenever

• the price level rises.

• the money supply increases.

• the price level rises continuously over a period of time.

• the price level falls continuously over a period of time.

The combination of a successful wage push by workers and the government’s commitment to high employment leads to

• demand-pull inflation.

• supply-side inflation.

• supply-shock inflation.

• cost-push inflation.

If workers do not believe that policymakers are serious about fighting inflation, they are most likely to push for higher wages, which will shift the aggregate _____ curve _____ and lead to unemployment or inflation or both.

• demand; inward

• demand; outward

• supply; inward

• supply; outward

Which among the following is exact opposite of inflation?

• Stagflation

• Disinflation

• Hyperinflation

• Deflation

Which out of the following is phenomenon that leads to Demand-Pull Inflation?

• It is a situation when aggregate demand in an economy outpaces aggregate supply

• It is a situation of persistent rise in inflation along with dip in growth and increase in unemployment

• It is a situation caused by an increase in prices of inputs like labour, raw material etc

• It is a situation when a nation experiences very high and accelerating inflation.

Which out of the following is phenomenon that leads to Cost-Push Inflation?

• It is a situation when aggregate demand in an economy outpaces aggregate supply

• It is a situation of persistent rise in inflation along with dip in growth and increase in unemployment

• It is a situation caused by an increase in prices of inputs like labour, raw material etc

• It is a situation when a nation experiences very high and accelerating inflation.

In those countries that do not have well-developed capital markets

• a. inflation is uncommon because they cannot finance budget deficits by issuing bonds.

• b. inflation is uncommon because government expenditures must be financed with taxes and/or user fees.

• c. budget deficits will tend to be inflationary.

• both (a) and (b) of the above.

Governments may pursue inflationary monetary policies

• to promote high employment.

• to accommodate demands of workers for higher wages.

• to finance a persistent budget deficit.

• for all the above reasons.