Inflation & Monetary Quiz

What does CPI stand for?

• Consumer Price Indicator
• Consumer Price Index
• Cost Price Index
• Consumer Purchasing Index

Which of the following is a limitation of the CPI?

• It measures GDP
• It includes all goods
• It reflects quality changes accurately
• There is no such thing as a typical family

What causes demand-pull inflation?

• Increased taxes
• Falling wages
• Aggregate demand exceeding supply
• Government spending cuts

What causes cost-push inflation?

• Higher taxes
• Falling production costs
• Decreased demand
• Rising costs of production

Which of the following is a cost of high inflation?

• Increased savings
• Improved exports
• Greater certainty
• Erosion of savings' value

How does high inflation affect exports?

• Makes exports cheaper
• Makes exports more competitive
• Makes exports more expensive
• No effect on exports

What is disinflation?

• Prices falling
• Prices rising faster
• Prices rising slower
• Stable prices

Deflation occurs when:

• Prices are rising
• Prices are falling
• Prices are stable
• Prices rise and fall unpredictably

Which is a cause of deflation?

• Increased government spending
• Decreased AD
• Higher wages
• Increased money supply

One effect of deflation is:

• More borrowing
• Increased consumer spending
• Deferred consumption
• Rising prices