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Worksheetstypes of inflation
Total questions: 15
Worksheet time: 5mins
explain why a high inflation rate triggers an increase in interest rates?
interest rates are raised to attract domestic deposit in the face of a rapidly growing economy
Interest rates are raised to discourage domestic credit consumption.
Interest rates are raised to improve the purchasing power of the domestic currency
Interest rates are raised to attract cheaper foreign imports in the face of lower domestic production
this type of inflation is related with stagflation
creep inflation
hyper inflation
open inflation
galloping inflation
Simon borrowed R10 000 from the bank at the end of 2011 at a fixed interest rate of 20%. At the end of 2012, the inflation rate was 25%. Inflation has been ________ to Simon; the real value of his loan plus interest payments changed to ________.
beneficial; R9 600
beneficial; R4 800
beneficial; R8 000
costly; R10500
Which of the following statements is/are correct? One way to combat demand-pull inflation.
i. is if the Reserve Bank raises the interest rates.
ii.Demand-pull inflation usually leads to increased prices and increased unemployment.
iii.Demand-pull inflation can be initiated by a cut in the marginal tax rate.
i and ii
i and iii
ii and ii
All three statements are correct
state if the following statements is true?
The consumer price index (CPI) measures the cost of all consumer goods and services
A 10% rate of inflation means that inflation is 10% per month
The inflation rate is calculated from a set of CPI figures.
The producer price index (PPI):
measures the cost of a representative basket of goods and services to the consumers
includes the cost of manufactured goods to the consumers.
includes the cost of capital and intermediate goods.
excludes the price of imported goods
Inflation is:
a rapid increase in the quantity of money
a sustained increase in prices in general
too much money chasing too few goods
a once-off increase in prices in general.
Demand-pull inflation may be caused by:
An increase in costs
A reduction in interest rates
A reduction in government spending
An outward shift in aggregate supply
The effects of inflation on the price competitiveness of a country's products may be offset by:
An appreciation of the currency
A revaluation of the currency
A depreciation of the currency
Lower inflation abroad
An increase in aggregate demand is more likely to lead to demand-pull inflation if:
Aggregate supply is perfectly elastic
Aggregate supply is perfectly inelastic
Aggregate supply is unit elastic
Aggregate supply is relatively elastic
Demand-pull inflation may be caused by:
Always reduces the cost of living
A reduction in interest rates
A reduction in government spending
n outward shift in aggregate supply
Inflation
Always reduces the cost of living
Always reduces the standard of living
Reduces the price of products
Reduces the purchasing power of a pound
Which of the following is a cause of Cost-Push Inflation?
Increases in the costs to produce
Lower labor costs
Lower prices for raw materials
Higher tax discounts on products
When aggregate demand increases faster than aggregate supply, prices go up. What is this an example of:
Demand-pull inflation
Cost-push inflation
Per-worker productivity
Deflation
Inflation is the state in which ...........
The value of money decreases
The value of money increases
The value of the money increases first and then decreases
The value of money decreases first and increases later
