Inflation and Government Fiscal and Monetary policies

Inflation also means a ___________ in the purchasing power of the currency

of a particular economy

• decrease

• increase

Which occurs as a consequence of price increase of goods and services?

• Built-in inflation

• Cost-push inflation

Which tracks the changes in the prices of goods and services at

producer or wholesale level?

• Producer price index

• Wholesale price index

The CPI is calculated by taking the __________________ of each of the categories and the averaging is done based on the importance of the particular commodity in the whole list.

• retail market price

• wholesale market price

Which is a Gross Domestic Product calculation that takes into consideration

the effect of inflation on GDP?

• Nominal GDP

• Real GDP

Which involves steps like increasing government purchases, decreasing

taxes or a combination of both?

• Contractionary Fiscal Policy

• Expansionary Fiscal Policy

Which refers to program built within the government budget designed to stabilize business cycles in an economy without any government intervention?

• Automatic stabilizer

• Discretionary fiscal policy

If the Central Bank increases the reserve ratio of commercial banks, it leads to a _______ in the supply of money in the economy.

• decrease

• increase

Which is a is the rate at which commercial  banks borrow funds from

the Central Bank of the country?

• Discount rate

• Interest on excess reserves

If the Central Bank  wants to increase the money supply, it will ______ the interest rate it pays to the commercial banks on the amount of excess reserves they hold with the Central Bank.

• increase

• lower