Inflation: Problem and Policies - Online Test
Q1. ___________ is a situation of persistent and appreciable rise in prices, leading to fall in purchasing power of money
Answer : Option C
Explaination / Solution:
Inflation is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling.
Q2. ___________ arises when there is an excess of demand for goods over their supply
Answer : Option A
Explaination / Solution:
Demand pull inflation is asserted to arise when aggregate demand in an economy out places aggregate supply resulting in a rise in the general price level.
Q3. Increase in money supply, growth in black money and Increase in population are the causes of
Answer : Option D
Explaination / Solution:
Demand pull inflation arises when the aggregate demand in an economy exceeds the aggregate supply. Increase in money supply, growth in black money and increase in population are some of the factors responsible for the increase in aggregate demand.
Q4. Cost push inflation occurs when
Answer : Option A
Explaination / Solution:
Cost push inflation develops because the increase in the costs of production cause the aggregate supply in the economy to decrease while aggregate demand remains the same. The result is therefore an increase in the general price level.
Q5. Continuously falling general price level is known as
Answer : Option C
Explaination / Solution:
Deflation is a decrease in the general price level of goods and services. It occurs when the inflation rate falls below 0%.
Q6. Which of the following is not a non-monetary measure?
Answer : Option A
Explaination / Solution:
Increase in the rate of interest is not a non monetary measure. It is a monetary measure because it will have a direct impact on the money supply in the economy.
Q7. Which of the following is the monetary measure (i) A check on the supply of money (ii) Increases in rate of interest (iii) Price control and rationing. Options are
Answer : Option C
Explaination / Solution:
No Explaination.
Q8. Which of the following is consistent with an increase in the inflation rate?
Answer : Option C
Explaination / Solution:
No Explaination.
Q9. The condition of a continually rising price level is defined as
Answer : Option D
Explaination / Solution:
No Explaination.
Q10. The price level over 60 years period between 1950-51 to 2009-10 shows more or less persistent
Answer : Option D
Explaination / Solution:
No Explaination.
