Inflation Quiz

What are the main causes of inflation?

• Increase in money demand, demand-pull deflation, cost-push deflation, and deflation expectations.

• Increase in money supply, demand-pull inflation, cost-push inflation, and inflation expectations.

• Decrease in money supply, deflation expectations, demand-pull deflation, and cost-push deflation.

• Decrease in money demand, demand-pull deflation, cost-push deflation, and deflation expectations.

What is demand-pull inflation?

• Demand-pull inflation is when the demand for goods and services exceeds the supply, causing prices to rise.

• Demand-pull inflation is when the supply of goods and services exceeds the demand, causing prices to rise.

• Demand-pull inflation is when the demand for goods and services decreases, causing prices to rise.

• Demand-pull inflation is when the government increases taxes, causing prices to rise.

What is cost-push inflation?

• Inflation caused by changes in monetary policy.

• Inflation caused by a decrease in production costs.

• Inflation caused by an increase in production costs.

• Inflation caused by changes in consumer spending.

How does inflation affect the purchasing power of money?

• It decreases the purchasing power of money.

• It increases the purchasing power of money.

• It has no effect on the purchasing power of money.

• It fluctuates the purchasing power of money.

What are the negative effects of high inflation on an economy?

• Stimulating economic growth, increasing employment opportunities, and boosting consumer spending.

• Eroding purchasing power, reducing consumer and investor confidence, distorting price signals, increasing uncertainty, and creating income inequality.

• Encouraging investment, promoting innovation, and fostering economic development.

• Stabilizing prices, reducing income inequality, and improving financial stability.

How does inflation impact interest rates?

• Inflation has no impact on interest rates.

• Inflation causes interest rates to decrease.

• Inflation causes interest rates to remain constant.

• Inflation causes interest rates to rise.

What is the role of the central bank in controlling inflation?

• The central bank controls inflation through monetary policy measures.

• The central bank controls inflation through supply and demand.

• The central bank controls inflation through fiscal policy measures.

• The central bank has no role in controlling inflation.

What are some economic indicators used to measure inflation?

• Unemployment rate

• Interest rates

• Stock market performance

• Consumer Price Index (CPI), Producer Price Index (PPI), GDP deflator

What is the difference between headline inflation and core inflation?

• Headline inflation includes only goods, while core inflation includes only services.

• Headline inflation includes volatile items like food and energy, while core inflation includes non-volatile items.

• Headline inflation measures the change in prices over time, while core inflation measures the change in quantity of goods and services.

• Headline inflation includes all goods and services, while core inflation excludes volatile items like food and energy.

How does inflation affect different sectors of the economy?

• Inflation only affects the financial sector of the economy.

• Inflation causes all sectors of the economy to collapse.

• Inflation affects different sectors of the economy in various ways.

• Inflation has no impact on different sectors of the economy.