Types of Inflation and Price Stability CDS Questions

CDS Economy

Types of Inflation and Price Stability MCQ Questions


7.
Demand-pull inflation can occur WITHOUT an increase in money supply when
A.
the government runs a budget surplus
B.
raw material costs increase
C.
the marginal efficiency of capital or the propensity to consume rises
D.
the central bank raises the bank rate
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ANSWER :
C. the marginal efficiency of capital or the propensity to consume rises
8.
In the Keynesian aggregate demand–supply diagram of demand-pull inflation, the stage where demand increases raise both prices and output is known as
A.
hyper-inflation
B.
galloping inflation
C.
true inflation
D.
bottleneck inflation
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ANSWER :
D. bottleneck inflation
9.
Demand-pull inflation is also commonly known as
A.
excess-demand inflation
B.
sellers' inflation
C.
wage inflation
D.
new inflation
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ANSWER :
A. excess-demand inflation
10.
Cost-push inflation is caused mainly by
A.
an increase in the propensity to consume
B.
an increase in the cost or supply price of goods
C.
an excess of aggregate demand over supply
D.
a fall in the general price level
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ANSWER :
B. an increase in the cost or supply price of goods
11.
Cost-push inflation is also referred to as the
A.
'old inflation' theory
B.
'excess-demand' theory
C.
'new inflation' theory
D.
'quantity' theory
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ANSWER :
C. 'new inflation' theory
12.
Which of the following is NOT a factor responsible for cost-push inflation?
A.
Higher prices of key raw materials
B.
Higher profit margins charged by monopolistic firms
C.
An increase in money wages secured by labour unions
D.
An increase in the marginal propensity to consume
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ANSWER :
D. An increase in the marginal propensity to consume