Types of Inflation and Price Stability CDS Questions

CDS Economy

Types of Inflation and Price Stability MCQ Questions


1.
What is Demand-Pull Inflation caused by?
A.
Increase in production costs
B.
Increase in aggregate demand
C.
Decrease in the money supply
D.
High unemployment rates
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ANSWER :
B. Increase in aggregate demand
2.
What is the main driver of Cost-Push Inflation?
A.
Decrease in demand
B.
Increase in production costs
C.
Higher taxes on consumers
D.
Fall in interest rates
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ANSWER :
B. Increase in production costs
3.
Which type of inflation is characterized by extremely high and rapid price increases?
A.
Hyperinflation
B.
Stagflation
C.
Deflation
D.
Reflation
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ANSWER :
A. Hyperinflation
4.
What is Stagflation?
A.
Rising prices and economic growth
B.
Rising prices with stagnant economic growth
C.
Falling prices and increasing employment
D.
A period of high unemployment and deflation
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ANSWER :
B. Rising prices with stagnant economic growth
5.
Which of the following is an example of imported inflation?
A.
Higher wages in the local economy
B.
Increase in the price of imported goods
C.
Expansion of domestic demand
D.
Rise in local property prices
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ANSWER :
B. Increase in the price of imported goods
6.
What does 'Core Inflation' exclude from its calculation?
A.
Food and fuel prices
B.
Housing costs
C.
Wages and salaries
D.
Government spending
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ANSWER :
A. Food and fuel prices