H1/H2 Inflation and Price Stability

What is the main aim of price stability in macroeconomics?

• To increase government spending

• To maintain low inflation

• To reduce unemployment

• To increase exports

Which of the following is a measure of inflation?

• Gross Domestic Product (GDP)

• Consumer Price Index (CPI)

• Balance of Trade

• Unemployment Rate

What type of inflation occurs when there is an increase in aggregate demand?

• Deflation

• Hyperinflation

• Cost-push inflation

• Demand-pull inflation

Which of the following is a consequence of high inflation?

• Lower interest rates

• Decreased investment certainty

• Higher export competitiveness

• Increased purchasing power

What is deflation?

• An increase in employment

• A sustained decrease in general price levels

• A decrease in government spending

• A rise in general price levels

Which of the following is NOT a benefit of price stability?

• Promotes investment and growth

• Maintains equity among income earners

• Increases government revenue

• Preserves internal purchasing power

What does core inflation in Singapore exclude?

• Energy prices

• Healthcare costs

• Food prices

• Accommodation and private transport

What is a common cause of cost-push inflation?

• Increase in consumer demand

• Decrease in production costs

• Increase in unit COP economy wide such as wages

• Increase in government spending

What happens to the purchasing power of money during inflation?

• It fluctuates randomly

• It remains the same

• It decreases

• It increases

What is the effect of inflation on net exports?

• Decreases import expenditure

• Increases domestic consumption

• Increases export competitiveness

• Reduces export revenue