Inflation: Macroeconomics (AP Economics) Online Test

Deflation is beneficial for: I Salary earners and Pensioners II Debtors III Equity holders
I only
II only
III only
I and II
II and III
Which of the following head is not adversely affected by Inflation?
The holders of short-term Treasury Bills
Commercial Banks
The holders of long-term Treasury Bills
Salary earners
A business firm which has taken huge loans in the past to finance plant expansion
‘Demand – Pull’ Inflation can result from:
Increase in Cost of materials
Increase in Interest rates
Increase in Investment
Decrease in Money Supply
All of the above
An Inflationary Gap arises when:
The Consumption and Investment spending exceeds the full employment GNP level
People demand more goods and services than that can be produced
The National Income, Output and Employment can’t rise further
Scheduled Investment exceeds the Full Employment Savings
All of the above
Which term is used to refer to the Inflation caused from an increase in the credit money?
Semi- Inflation
Credit Inflation
Credit Policy
Devaluation Inflation
Over Investment Inflation
The ‘Demand – pull’ Inflation is caused due to:
The general level of Prices
The Demand for Money
The Standard of Money
Aggregate Monetary Demand
None of the above
The ‘Cost-push Inflation’ is caused by: I Increase in the Cost of Production II Increase in the Money Wages without a relative increase in Labour Productivity III Higher price charged by producers in the Monopolistic and Oligopolistic markets
I only
II only
III only
II and III
I, II and III
With rapidly increasing prices, which kind of Inflation sets in?
Normal Inflation
Creeping Inflation
Hyper Inflation
Demand Pull Inflation
Worst Inflation
Which term is used to describe the rise in the Real Output with a rise in Price Level?
All of the following are related to Inflation except:
When prices rise to cover increased factor costs, Cost Inflation sets in
Inflation results in redistribution of Income
During Inflation, issue of new paper money worsens the situation
An increase in the supply of money results in Inflation
The decline in the value of money leads to Inflation

Inflation is the excess of Aggregate Demand in the economy. It has innumerable effect on the working of the economy, the banks and the Central Bank. Here is a 7-minute short Multiple Choice questions test relating to Inflation, Deflation, Inflationary Gap, Types of Inflation and other related concepts. While taking this test, go through all the options very carefully and then, mark your answers.

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