Inflation & Price Stability: Top 30

An economy is experiencing accelerating cost-push inflation. Which group is likely to be least concerned by this?

• A borrowers

• B consumers

• C creditors

• D exporters

Over a period of a year, the annual rate of inflation becomes negative. Which statement must be correct?

• A The cost of living has fallen.

• B The purchasing power of money has fallen.

• C The standard of living has increased.

• D There has been an increase in the Consumer Price Index.

Which statement best describes the consumer prices index (CPI)?

• A It is a measure of changes in the spending patterns of the average household.

• B It is a measure of changes in the standard of living of the average household.

• C It is a measure of the average change in prices of a basket of goods and services over time.

• D It is a measure of the level of prices of all goods and services.

Which combination is possible for an economy experiencing zero inflation?

• A

• B

• C

• D

Which term relates to a fall in the domestic real value of a currency?

• A deflation

• B depreciation

• C appreciation

• D inflation

If a country is experiencing a period of high inflation, which groups will benefit the most from this?

• A

• B

• C

• D

What is least likely to cause a simultaneous increase in demand-pull and cost-push inflation?

• A depreciation of currency

• B increased import tariffs

• C decreased spending on infrastructure

• D increased wages

The graph shows a country’s average annual inflation rate over a five-year period. What can be concluded about the general price level during the five years?

• A It fell in only one year.

• B It fell in only two years.

• C It rose in only two years.

• D It was constant in only one year.

Which combination of changes is most likely to result in a fall in a country’s inflation rate?

• A

• B

• C

• D

Assuming the demand for oil is price-inelastic, what will be the effect on demand-pull inflation and on cost-push inflation in an oil-importing country of an increase in the world price of oil?

• A

• B

• C

• D