FPEC1014 TUTORIAL 6

Inflation is ? .

• an increase in the general price level

• a situation where workers are unemployed

• an economic concern only during war

• a condition when aggregate supply exceeds aggregate demand

If the consumer price index rises to 125 from the base year, then the inflation rate is .

• 10%

• 25%

• 30%

• 35%

Demand-pull inflation is caused by ?.

• monopoly power

• tax increase

• depleting resources

• full employment

When inflation occurs, consumers’ purchasing power ?.

• falls

• rises

• is constant

• falls but rises later

Which of the following is implemented to control inflation?

• a reduction in taxes

• an increase in government expenditure

• a rise in interest rate

• The central bank buys Treasury Bills from the public.

Which of the following is not considered as a tool of monetary policy?

• a change in the cash liquidity ratio

• a change in the bank rate

• a reduction in government expenditure

• buying of government bonds

Which of the following is a cause of cost-push inflation?

• an increase in price of raw materials

• an increase in investment

• an increase in government spending

• an increase in consumption

All of the following statements are true except ? .

• those receiving fixed interest from bonds suffer losses during inflation

• debtors gain during inflation

• creditors incur losses during inflation

• pensioners gain during inflation

Calculate

(i) the inflation rate in Malaysia for the year of 2013

Calculate

(i) the inflation rate in Singapore for the year of 2013