Top 50+ Solved Business Cycle, inflation and deflation MCQ Questions Answer
Q. Demand-pull inflation may be caused by:
a. an increase in costs
b. a reduction in interest rates
c. a reduction in government spending
d. an outward shift in aggregate supply
Q. Inflation:
a. always reduces the cost of living
b. always reduces the standard of living
c. reduces the price of products
d. reduces the purchasing power of a rupee
Q. An increase in injections into the economy may lead to:
a. an outward shift of aggregate demand and demand-pull inflation
b. an outward shift of aggregate demand and cost-push inflation
c. an outward shift of aggregate supply and demand-pull inflation
d. an outward shift of aggregate supply and cost-push inflation
Q. According to the Phillips curve, unemployment will return to the natural rate when:
a. nominal wages are equal to expected wages
b. real wages are back at long-run equilibrium level
c. nominal wages are growing faster than inflation
d. inflation is higher than the growth of nominal wages
Q. What is the cause of inflation?
a. if money supply increases.
b. if the production rate falls.
c. if money supply increases and production falls.
d. both money supply and production decreases.
Q. What does the inflation imply?
a. rise in budget deficit
b. rise in prices of consumer goods.
c. rise in money supply.
d. rise in general price index.
Q. How the inflation can be checked temporarily?
a. increase in money supply
b. decrease in money supply
c. increase in wages
d. decrease in tax
Q. Which groups are not protected from inflation?
a. industrial worker
b. agricultural farmers
c. government pensioners
d. saving bank account holders
Q. Which of the following cannot be included among the remedies of inflation?
a. better capacity utilization
b. by making low bank rate
c. by reducing budget deficit
d. by making high bank rate
Q. What is Cost-Push inflation?
a. increasing money supply
b. increasing indirect tax
c. population increase
d. expenditure increase unnecessarily.
Q. Inflation is the state in which ..............................
a. the value of money decreases
b. the value of money increases
c. the value of the money increases first and then decreases
d. the value of money decreases first and increases later
Q. Which of the following class will not be negatively affected by the higher inflation?
a. the consumer class
b. the debtor class
c. pensioner class
d. business class
Q. 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 the above
Q. The trough of a business cycle occurs when _____ hits its lowest point.
a. inflation
b. the money supply
c. aggregate economic activity
d. the unemployment rate
Q. . When aggregate economic activity is increasing, the economy is said to be in
a. an expansion.
b. a contraction.
c. a peak.
d. a turning point.