A level Inflation Quiz 1

16 QuestionsMultiple ChoiceFree Practice

About this quiz

This A level Inflation Quiz 1 quiz contains 16 multiple choice questions designed to help you revise and test your A level Inflation Quizzes knowledge. Select an answer for each question and click “Submit Answer” to see instant feedback. Take your time and try to score as high as possible!

Description

In this economics quiz, we shall be looking at inflation. We all know about inflation being a general increase in price and a fall in the purchasing value of money. But in this quiz, we are going to take the study even further by looking at the value of money, consumer price index, consumption expenditure, causes, and types of inflation. Before moving any further, let’s have a recap of what inflation is:

Inflation refers to the rate at which the value of a currency is dropping and thus the general level of prices for goods and services is increasing. The most commonly used inflation indices are the Wholesale Price Index (WPI) and the Consumer Price Index (CPI). We have 3 types of inflation which are Demand-Pull, Cost-Push, and Built-In inflations. Demand-Pull inflation has to do with the increase in the price levels as a result of aggregate demand in an economy strongly outweighing the aggregate supply. Cost-Push inflation occurs when the prices of goods and services increase as a result of an increase in the cost of wages and raw materials. Lastly, Built-In inflation is a type of inflation that results from past events and continues in the present.

There is so much to discover about inflation. If you are interested in having this knowledge, take this quiz and explore more exciting facts. Good luck as you practice. 

Progress0 / 16 answered
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Question 1 of 16

 The purchasing power of money or value of money varies 

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Question 2 of 16

 Inflation helps in redistribution of income through 

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Question 3 of 16

 The consumer price index is designed to measure the degree to which 

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Question 4 of 16

 To know whether the rich are getting richer and the poor are getting poorer, it is necessary to compare 

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Question 5 of 16

  Share of food items in total consumption expenditure has reduced in the last two decades because 

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Question 6 of 16

 A low rate of inflation is considered necessary for economic growth. Why? 

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Question 7 of 16

 Which one of the following statements refers to “disinflation”? 

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Question 8 of 16

 Consider the following statements: 

1. All inferior goods are Giffen goods

2. All increase in income results in lower demand for an inferior good

 Which of the statements given above is/are correct? 

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Question 9 of 16

 When there is a fall in the prices in an economy, it may lead to which of the following?  

  1. Increase in the demand for consumer goods
  2. Rise in the interest rates
  3. Increase in exports

 Select the correct answer using the codes given below: 

10

Question 10 of 16

 Which of the following factors contribute towards demand-pull inflation?  

  1. Increase in government expenditure
  2. Rising population and household consumption
  3. Increase in income level
  4. Fluctuations in output and supply
  5. Increase in administered prices

 Select the correct answer using the codes given below: 

11

Question 11 of 16

 Consider the following statements:  

  1. Reduction in the reverse repo rate can be used to combat inflation
  2. Purchasing power of money reduces on account of inflation
  3. Inflation favours the debtors

 Select the correct answer using the codes given below: 

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Question 12 of 16

  Economists are faced with the problem of selecting items for the consumer price index. The index number is expected to measure the general changes in the price level of a basket of commodities. Which of the quality/qualities listed below should be taken care of while selecting the commodities?  

  1. The items should be representative of the tastes, habits, customs, and necessities of the people to whom they relate.
  2. The items should be adequate in number and importance
  3. The items should be moderately priced.

Select the correct answer using the codes given below:

13

Question 13 of 16

 Which of the following are the effects of inflation in the economy?

  1. With the same level of wages, the purchasing power of people gets reduced.
  2. The high inflation rate reduces the real value of savings of people
  3. Inflation leads to increase in the real rate of interest

Select the correct answer using the code given below:

14

Question 14 of 16

 Which among the following are the causes of cost-push inflation?

  1. Deficit financing
  2. Increase in administered prices
  3. Increase in interest rates
  4. Increase in population
  5. Increase in oil prices

Select the correct answer using the codes given below:

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Question 15 of 16

 Consider the following statements:

  1. A uniform market across the nation helps in controlling inflation levels in goods and services.
  2. Supply side factors usually take a longer time period than the demand side factors to adjust
  3. Agencies engaged in the management of money supply can affect demand side factors to influence inflation levels in economy

Select the correct answer using the codes given below:

16

Question 16 of 16

 Consider the following statements:

  1. The wholesale price index gives more weightage to the primary products because of the dominant role of agriculture in the Indian economy
  2. The consumer price index gives more weightage to manufactured articles on account of change in demand pattern in the economy

Which of the statements given above/is are correct?