Q. What is demand-pull inflation?
A.
Inflation caused by increased production costs
B.
Inflation resulting from increased consumer demand
C.
Inflation due to government regulation
D.
Inflation that occurs during a recession
Show solution
Solution
Demand-pull inflation occurs when the demand for goods and services exceeds their supply, leading to higher prices.
Correct Answer:
B
— Inflation resulting from increased consumer demand
Learn More →
Q. What is hyperinflation?
A.
Inflation at a rate of 1-2%
B.
Inflation that exceeds 50% per month
C.
A stable inflation rate
D.
Deflationary period
Show solution
Solution
Hyperinflation is an extremely high and typically accelerating inflation, often exceeding 50% per month.
Correct Answer:
B
— Inflation that exceeds 50% per month
Learn More →
Q. What is the impact of inflation on purchasing power?
A.
It increases purchasing power
B.
It decreases purchasing power
C.
It has no effect on purchasing power
D.
It stabilizes purchasing power
Show solution
Solution
Inflation decreases purchasing power, meaning that consumers can buy less with the same amount of money as prices rise.
Correct Answer:
B
— It decreases purchasing power
Learn More →
Q. What is the relationship between inflation and interest rates?
A.
Higher inflation typically leads to lower interest rates
B.
Higher inflation typically leads to higher interest rates
C.
Inflation has no effect on interest rates
D.
Interest rates are always fixed regardless of inflation
Show solution
Solution
Higher inflation usually leads to higher interest rates as lenders need to compensate for the decrease in purchasing power.
Correct Answer:
B
— Higher inflation typically leads to higher interest rates
Learn More →
Q. What role does the Reserve Bank of India (RBI) play in controlling inflation?
A.
Setting fiscal policy
B.
Regulating stock markets
C.
Adjusting interest rates
D.
Controlling foreign exchange rates
Show solution
Solution
The RBI controls inflation primarily by adjusting interest rates, which influences borrowing and spending in the economy.
Correct Answer:
C
— Adjusting interest rates
Learn More →
Q. Which of the following is a common measure of inflation?
A.
Gross Domestic Product (GDP)
B.
Consumer Price Index (CPI)
C.
Unemployment Rate
D.
Balance of Payments
Show solution
Solution
The Consumer Price Index (CPI) is a widely used measure of inflation, reflecting the average change over time in the prices paid by consumers for a basket of goods and services.
Correct Answer:
B
— Consumer Price Index (CPI)
Learn More →
Q. Which of the following is NOT a type of inflation?
A.
Creeping inflation
B.
Walking inflation
C.
Galloping inflation
D.
Stagflation
Show solution
Solution
While creeping, galloping, and stagflation are recognized types of inflation, 'walking inflation' is not a standard term used in economics.
Correct Answer:
B
— Walking inflation
Learn More →
Showing 1 to 7 of 7 (1 Pages)
