Types of Inflation and Price Stability CDS Questions

CDS Economy

Types of Inflation and Price Stability MCQ Questions


1.
Demand-pull inflation emerges in an economy when
A.
aggregate demand exceeds the level of full-employment output
B.
there is a continuous fall in the general price level
C.
the cost of raw materials rises sharply
D.
trade unions secure higher money wages
😑 View Answer Rough Work Error
ANSWER :
A. aggregate demand exceeds the level of full-employment output
2.
The phrase 'too much money chasing too few goods' best describes
A.
disinflation
B.
demand-pull inflation
C.
structural inflation
D.
cost-push inflation
😑 View Answer Rough Work Error
ANSWER :
B. demand-pull inflation
3.
According to Keynes, true inflation begins only
A.
when there is large-scale unemployment
B.
as soon as money supply increases at any output level
C.
after the economy reaches the level of full employment
D.
during the depression phase of the trade cycle
😑 View Answer Rough Work Error
ANSWER :
C. after the economy reaches the level of full employment
4.
In demand-pull inflation, a rise in aggregate demand before full employment leads to
A.
a rise in prices but no change in output
B.
a fall in output with rising prices
C.
a fall in both output and prices
D.
an increase in both output and the price level
😑 View Answer Rough Work Error
ANSWER :
D. an increase in both output and the price level
5.
The situation in which a rise in aggregate demand raises only the price level (output remaining constant) is called
A.
true inflation
B.
semi-inflation
C.
bottleneck inflation
D.
reflation
😑 View Answer Rough Work Error
ANSWER :
A. true inflation
6.
Which of the following is a likely cause of demand-pull inflation?
A.
A sharp rise in the price of imported crude oil
B.
An increase in government expenditure financed by deficit financing
C.
An increase in the profit margins of monopolists
D.
A rise in money wages without a rise in productivity
😑 View Answer Rough Work Error
ANSWER :
B. An increase in government expenditure financed by deficit financing