Inflation Control Quiz

What is inflation?

• A decrease in the general price level of goods and services

• A persistent increase in the general price level of goods and services

• A one-time increase in the price of goods and services

• A stable price level of goods and services

Which index is commonly used to measure changes in the price level of a basket of consumer goods and services?

• Gross Domestic Product (GDP)

• Consumer Price Index (CPI)

• Unemployment Rate Index

• Producer Price Index (PPI)

What type of inflation occurs when an economy's aggregate demand outpaces aggregate supply?

• Built-in Inflation

• Hyperinflation

• Cost-Push Inflation

• Demand-Pull Inflation

What can lead to inflation as too much money chases too few goods?

• Excessive money supply growth

• Increase in production efficiency

• Decrease in government spending

• Reduction in consumer spending

What is one consequence of inflation?

• Decreased menu costs

• Uncertainty in the economy

• Reduced redistribution of wealth

• Increased purchasing power

Which strategy can central banks use to control inflation by manipulating interest rates?

• Open Market Operations

• Reserve Requirements

• Interest Rates

• Inflation Targeting

What can reduce aggregate demand and help control inflation?

• Reducing taxes

• Increasing government spending

• Implementing wage controls

• Increasing public debt

What can improve supply and reduce inflationary pressures?

• Increasing regulations

• Reducing productivity

• Improving labour market flexibility

• Implementing price controls

Which country experienced deflation and low inflation, highlighting the challenges of stimulating inflation?

• European Union

• Japan

• Brazil

• United States

What can complicate inflation control due to external shocks and global price trends?

• Globalization

• Inflation Expectations

• Political Constraints

• Technological Change