McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Economics (CBCS) .
Chapters
| 1. |
Inflation is a situation when |
| A. | Prices of some goods rise |
| B. | General price level rises continuously |
| C. | Prices double every year |
| D. | Prices rise and fall |
| Answer» B. General price level rises continuously | |
| 2. |
An inflation caused by an enhanced wages of labour is |
| A. | Demand-pull inflation |
| B. | Cost-push inflation |
| C. | Hyperinflation |
| D. | Stagflation |
| Answer» B. Cost-push inflation | |
| 3. |
Inflation in under-developed country is basically caused by |
| A. | Mass poverty |
| B. | Less production |
| C. | Lack of technical know-how |
| D. | Market imperfection |
| Answer» D. Market imperfection | |
| 4. |
According to Keynes, inflationary gap is caused by |
| A. | excess supply |
| B. | excess demand |
| C. | deficiency of demand |
| D. | deficiency of supply |
| Answer» B. excess demand | |
| 5. |
Stagflation implies a situation of |
| A. | High inflation and high unemployment |
| B. | Low unemployment and low inflation |
| C. | High inflation and low unemployment |
| D. | Low inflation and high unemployment |
| Answer» A. High inflation and high unemployment | |
| 6. |
Demand- Pull inflation is caused by an |
| A. | Increase in the aggregate effective demand for goods and services |
| B. | Increase in the money incomes of the factors of production |
| C. | Increased investment in the economy |
| D. | All of the above |
| Answer» A. Increase in the aggregate effective demand for goods and services | |
| 7. |
Which of the following is a monetary measure to control inflation in an economy? |
| A. | Increase in money supply |
| B. | Demonetization of currency |
| C. | Increase in government expenditure |
| D. | All of the above |
| Answer» B. Demonetization of currency | |
| 8. |
In Keynesian view, inflation is |
| A. | The rise in the price level after the point of full employment |
| B. | A rise in the price level before the point of full employment |
| C. | Too much money chasing too few goods |
| D. | All of the above |
| Answer» A. The rise in the price level after the point of full employment | |
| 9. |
“Inflation is a state in which the value of money is falling i.e., prices are rising”.Who said this? |
| A. | Hansen |
| B. | Keynes |
| C. | Crowther |
| D. | Fisher |
| Answer» C. Crowther | |
| 10. |
If inflation is allowed to continue without any check, it is known as |
| A. | Supressed inflation |
| B. | Normal inflation |
| C. | Open inflation |
| D. | Deflation |
| Answer» C. Open inflation | |
| 11. |
When both prices and money income fall, the situation is called |
| A. | Disinflation |
| B. | Recession |
| C. | Deflation |
| D. | Anti-inflation |
| Answer» C. Deflation | |
| 12. |
Inflation in a developed country usually sets in |
| A. | Before the point of full employment |
| B. | After the point of full employment |
| C. | at the point full employment |
| D. | None of the above |
| Answer» B. After the point of full employment | |
| 13. |
During inflation, who suffers the most? |
| A. | Wage and salary earners |
| B. | Creditors |
| C. | Debtors |
| D. | Businessman |
| Answer» A. Wage and salary earners | |
| 14. |
When government interrupts price rise, there is |
| A. | Suppressed inflation |
| B. | Reflation |
| C. | Open inflation |
| D. | Deflation |
| Answer» A. Suppressed inflation | |
| 15. |
The phenomenal rise in prices accompanied by increased real income is known as |
| A. | inflation |
| B. | deflation |
| C. | reflation |
| D. | None of the above |
| Answer» C. reflation | |
| 16. |
Which of the following measure proves effective in reducing the rate of inflation? |
| A. | Decreased personal consumption |
| B. | Evaluation of currency |
| C. | Increased taxation |
| D. | All of the above |
| Answer» C. Increased taxation | |
| 17. |
Inflation can be controlled by applying: |
| A. | Monetary and fiscal policies |
| B. | Monetary and labour policy |
| C. | Fiscal and Commercial Policies |
| D. | All of the above |
| Answer» A. Monetary and fiscal policies | |
| 18. |
During inflation |
| A. | Lenders lose, borrowers gain |
| B. | Borrowers lose, lenders gain |
| C. | Borrowers and lenders both lose |
| D. | All sections of the society gain |
| Answer» A. Lenders lose, borrowers gain | |
| 19. |
Which people are most likely to gain during inflation? |
| A. | Those living on pension |
| B. | Those living on their savings |
| C. | Those who are repaying borrowed money |
| D. | Those who have lent money |
| Answer» C. Those who are repaying borrowed money | |
| 20. |
Inflation leads to |
| A. | Distribution of income equal |
| B. | Distribution of income unequal |
| C. | No effect on distribution of income |
| D. | Affects only industrial sector |
| Answer» B. Distribution of income unequal | |
| 21. |
Inflation in an under-developed economy generally sets in |
| A. | Before the point of full employment |
| B. | After the point of full employment |
| C. | At the point of full employment level |
| D. | All of the above |
| Answer» A. Before the point of full employment | |
| 22. |
Which of the following measure is adopted to reduce inflation? |
| A. | Reduction in bank rate |
| B. | Reduction in Repo rate |
| C. | Increase in government expenditure |
| D. | Cuts in government spending |
| Answer» D. Cuts in government spending | |
| 23. |
According to the monetarists, inflation is caused by |
| A. | Supply shocks |
| B. | Expansionary fiscal policies |
| C. | Expansionary monetary policies |
| D. | Government regulations |
| Answer» C. Expansionary monetary policies | |
| 24. |
Theoretically, one can distinguish a demand- pull inflation from a cost-push inflation by comparing |
| A. | How fast prices rise relative to wages |
| B. | The unemployment rate with its natural rate level |
| C. | When prices rise relative to wages |
| D. | None of the above |
| Answer» B. The unemployment rate with its natural rate level | |
| 25. |
Demand-pull inflation arises when |
| A. | Policymakers set a very high unemployment target |
| B. | A persistent budget deficit is financed by money creation |
| C. | The deficit is financed by selling bonds to the public |
| D. | All of the above |
| Answer» B. A persistent budget deficit is financed by money creation | |
| 26. |
Government may pursue inflationary monetary policies |
| A. | To promote high employment |
| B. | To accommodate demands of workers for higher wages |
| C. | To finance a persistent budget deficit |
| D. | All of the above |
| Answer» D. All of the above | |
| 27. |
Governments may end up with a high money growth rate and high inflation as a result of policies designed to |
| A. | Lower unemployment |
| B. | Finance persistent government budget deficits through money creation rather than by issuing bonds |
| C. | Redistribute wealth from debtors to creditors |
| D. | Both ( a) and (b |
| Answer» D. Both ( a) and (b | |
| 28. |
Which of the following is an effect of inflation? |
| A. | Erosion in purchasing power |
| B. | Affects relative price of goods |
| C. | Increase in inequalities of income |
| D. | All of the above |
| Answer» D. All of the above | |
| 29. |
Which of the following can be undertaken to control inflation? |
| A. | Control on public expenditure |
| B. | Control on hoarding and black-marketing |
| C. | Effective control on credit |
| D. | All of the above |
| Answer» D. All of the above | |
| 30. |
Which of the following is phenomenon that leads to Hyperinflation? |
| A. | It is a situation when aggregate demand in an economy outpaces aggregate supply |
| B. | It is a situation of persistent rise in inflation along with dip in growth and increase in unemployment |
| C. | It is a situation caused by an increase in prices of inputs like labour, raw material etc |
| D. | It is a situation when a nation experiences very high and accelerating inflation |
| Answer» D. It is a situation when a nation experiences very high and accelerating inflation | |
| 31. |
Inflationary gap said to exist when |
| A. | Real GDP >Potential GDP |
| B. | Real GDP <Potential GDP |
| C. | Real GDP= Potential GDP |
| D. | Unemployment rate> natural rate of unemployment |
| Answer» A. Real GDP >Potential GDP | |
| 32. |
Phillip’s curve shows the relationship between the rate of |
| A. | Unemployment and output growth |
| B. | unemploymentand increase in money wages |
| C. | Employment and inflation |
| D. | All of the above |
| Answer» B. unemploymentand increase in money wages | |
| 33. |
According to Phillips curve unemployment will return to the natural rate when: |
| A. | Nominal wages are equal to expected wages |
| B. | Real wages are back at equilibrium level |
| C. | Nominal wages are growing faster than inflation |
| D. | Inflation is higher than the growth of nominal wages |
| Answer» B. Real wages are back at equilibrium level | |
| 34. |
An increase in aggregate is more likely to lead to demand pull inflation if: |
| A. | Aggregate supply is perfectly elastic |
| B. | Aggregate supply is perfectly inelastic |
| C. | Aggregate supply is unit inelastic |
| D. | Aggregate supply is relatively inelastic |
| Answer» B. Aggregate supply is perfectly inelastic | |
| 35. |
In short-run, unemployment may fall below the natural rate of unemployment if: |
| A. | Nominal wages have risen less than inflation |
| B. | Nominal wages have risen at the same rate as inflation |
| C. | Nominal wages have risen more than inflation |
| D. | Nominal wages have risen less than unemployment |
| Answer» A. Nominal wages have risen less than inflation | |
| 36. |
The effects of inflation on the price competitiveness of a country’s products may be offset by |
| A. | An appreciation of the currency |
| B. | A revaluation of the currency |
| C. | A depreciation of the currency |
| D. | None of the above |
| Answer» C. A depreciation of the currency | |
| 37. |
Countries with the highest inflation rates are likely to have |
| A. | The highest rate of money growth |
| B. | Large budget deficits |
| C. | The lowest interest rates |
| D. | Both (a) and (b |
| Answer» D. Both (a) and (b | |
| 38. |
A one-time increase in the price level is |
| A. | rarely reported by the news media as inflation, but is nevertheless considered to be inflation by economists |
| B. | regularly reported by the news media as inflation, but is not considered to be inflation by economist. |
| C. | regularly reported by the news media as inflation because it is considered to be inflation by economists |
| D. | None of the above |
| Answer» B. regularly reported by the news media as inflation, but is not considered to be inflation by economist. | |
| 39. |
Which economist proposed that “ Inflation is always and everywhere a monetary phenomenon” |
| A. | JM Keynes |
| B. | J.R.Hicks |
| C. | Milton Friedman |
| D. | Franco Modigliani |
| Answer» C. Milton Friedman | |
| 40. |
According to monetarists, inflation is caused by |
| A. | Supply shocks |
| B. | Expansionary fiscal policies |
| C. | Expansionary monetary policies |
| D. | Rising prices |
| Answer» C. Expansionary monetary policies | |
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