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WorksheetsInflation & Monetary Quiz
Total questions: 41
Worksheet time: 7mins
Name
Class
Date
1.
What does CPI stand for?
a)
Consumer Price Indicator
b)
Consumer Price Index
c)
Cost Price Index
d)
Consumer Purchasing Index
2.
Which of the following is a limitation of the CPI?
a)
It measures GDP
b)
It includes all goods
c)
It reflects quality changes accurately
d)
There is no such thing as a typical family
3.
What causes demand-pull inflation?
a)
Increased taxes
b)
Falling wages
c)
Aggregate demand exceeding supply
d)
Government spending cuts
4.
What causes cost-push inflation?
a)
Higher taxes
b)
Falling production costs
c)
Decreased demand
d)
Rising costs of production
5.
Which of the following is a cost of high inflation?
a)
Increased savings
b)
Improved exports
c)
Greater certainty
d)
Erosion of savings' value
6.
How does high inflation affect exports?
a)
Makes exports cheaper
b)
Makes exports more competitive
c)
Makes exports more expensive
d)
No effect on exports
7.
What is disinflation?
a)
Prices falling
b)
Prices rising faster
c)
Prices rising slower
d)
Stable prices
8.
Deflation occurs when:
a)
Prices are rising
b)
Prices are falling
c)
Prices are stable
d)
Prices rise and fall unpredictably
9.
Which is a cause of deflation?
a)
Increased government spending
b)
Decreased AD
c)
Higher wages
d)
Increased money supply
10.
One effect of deflation is:
a)
More borrowing
b)
Increased consumer spending
c)
Deferred consumption
d)
Rising prices
11.
What is a key goal of monetary policy?
a)
Unemployment rate at 10%
b)
Unstable prices
c)
High inflation
d)
Low and stable inflation
12.
Which of the following is a monetary policy tool (HL)?
a)
Government spending
b)
Taxation
c)
Open market operations
d)
Subsidies
13.
How do rising interest rates affect consumption?
a)
Increase it
b)
Have no effect
c)
Decrease it
d)
Make it stable
14.
How do falling interest rates affect investment?
a)
Reduce investment
b)
No effect
c)
Increase investment
d)
Cause deflation
15.
The central bank uses interest rates to:
a)
Control government spending
b)
Influence AD
c)
Adjust taxes
d)
Set wages
16.
Fractional reserve banking allows banks to:
a)
Increase reserves
b)
Lend less
c)
Create money
d)
Print money
17.
Which of the following is an example of expansionary monetary policy?
a)
Raising interest rates
b)
Selling bonds
c)
Increasing reserve requirements
d)
Lowering interest rates
18.
What does quantitative easing involve?
a)
Raising taxes
b)
Reducing public debt
c)
Purchasing financial assets
d)
Cutting wages
19.
Which is a weakness of monetary policy?
a)
Fast implementation
b)
Good for cost-push inflation
c)
Short time lag
d)
Ineffective when interest rates are near zero
20.
What is the formula for real interest rate?
a)
Nominal Rate + Inflation
b)
Inflation - Nominal Rate
c)
Nominal Rate - Inflation
d)
Real Rate + Inflation
21.
How do low interest rates affect exports?
a)
Increase demand for currency
b)
Make exports more expensive
c)
Make exports less competitive
d)
Make exports cheaper
22.
Monetary policy can be adjusted:
a)
Only once a year
b)
Every five years
c)
Through small monthly changes
d)
By elections
23.
Which inflation measure assumes constant consumer behaviour?
a)
CPI
b)
GDP deflator
c)
PPI
d)
RPI
24.
What does cost-push inflation usually involve?
a)
Falling raw material prices
b)
Supply shocks
c)
Increased taxes
d)
More exports
25.
Demand-pull inflation is often linked with:
a)
Recession
b)
High interest rates
c)
Strong economic growth
d)
Falling wages
26.
High inflation creates:
a)
Certainty
b)
Better planning
c)
Uncertainty
d)
Stable prices
27.
Deflation can lead to:
a)
Higher profits
b)
Increased confidence
c)
Lower unemployment
d)
Higher real debt burdens
28.
During deflation, consumers may:
a)
Spend more
b)
Save less
c)
Delay purchases
d)
Take out loans
29.
An increase in money supply causes:
a)
Interest rates to fall
b)
Interest rates to rise
c)
Deflation
d)
Higher taxes
30.
The CPI is used to monitor:
a)
Unemployment
b)
Exports
c)
Cost of living
d)
GDP
31.
An increase in central bank's base rate usually leads to:
a)
Lower inflation
b)
Higher investment
c)
Increased AD
d)
More exports
32.
A central bank reducing the reserve requirement means:
a)
Less lending
b)
More lending
c)
Higher taxes
d)
Stable money supply
33.
Substitution bias in CPI means:
a)
Consumers always buy the same products
b)
New products are included
c)
Changes in quality are considered
d)
Consumer behaviour is ignored
34.
Cost-push inflation is not effectively controlled by:
a)
Supply-side policies
b)
Monetary policy
c)
Interest rates
d)
Fiscal policy
35.
Quantitative easing is considered:
a)
Conventional policy
b)
Not related to monetary policy
c)
Unconventional policy
d)
Redundant
36.
Low inflation compared to other countries makes exports:
a)
More competitive
b)
Less competitive
c)
Unaffected
d)
More expensive
37.
If interest rates rise, currency demand usually:
a)
Falls
b)
Stays the same
c)
Rises
d)
Has no effect
38.
Deflation often results in:
a)
Business growth
b)
Layoffs and closures
c)
Rising AD
d)
Higher wages
39.
Monetary policy's effect on AD is:
a)
Weak
b)
Strong
c)
Irrelevant
d)
Random
40.
If central bank sells government securities, the money supply:
a)
Increases
b)
Remains unchanged
c)
Decreases
d)
Is unaffected
41.
An advantage of monetary policy is:
a)
Long time lag
b)
Government control
c)
Difficult to reverse
d)
Incremental changes
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