Quiz on Inflation and Deflation

What is inflation?

• A measure of consumer confidence

• An increase in the general price level

• A decrease in the general price level

• A stable price level

Which of the following is a cause of inflation?

• Decrease in money supply

• Cost-push inflation

• Deflationary pressures

• Increase in savings

What does CPI stand for?

• Consumer Purchasing Index

• Consumer Price Index

• Cost Price Indicator

• Cost Price Index

Which group is likely to lose during inflation?

• Borrowers

• Investors

• Consumers

• Lenders

What is a consequence of deflation?

• Higher wages

• Unemployment

• Increased consumer spending

• Increased investment

What is demand-pull inflation?

• Inflation caused by external factors

• Inflation caused by government policies

• Inflation caused by rising production costs

• Inflation caused by increased demand

Which of the following is NOT a consequence of inflation?

• Fall in real income

• Borrowers gain

• Increased savings

• Fixed income earners lose

What happens to the cost of borrowing during deflation?

• It becomes unpredictable

• It remains the same

• It increases

• It decreases

What is hyperinflation?

• A gradual increase in prices

• Extreme and rapid inflation

• A stable economic condition

• Inflation that is controlled

Which of the following is a policy to control inflation?

• Encouraging spending

• Decreasing interest rates

• Raising interest rates

• Increasing money supply