During periods of inflation, tax rates should:
a) Increase
b) Decrease
c) Remain constant
d) Fluctuate
Answer: a) Increase
2. Government securities are considered liquid because they are:
a) Backed by the government treasury
b) Convertible into other types of saving deposits
c) Quickly and easily marketable
d) Stable in value
Answer: c) Quickly and easily marketable
3. Which of the following is a consequence of inflationary price rise?
a) Obstacle in development
b) Increase in economic inequalities
c) Adverse effect on the balance of payment
d) All of these
Answer: d) All of these
4. The worldwide Great Depression took place in:
a) 1936
b) 1929
c) 1928
d) 1930
Answer: b) 1929
5. The consumer price index reflects:
a) The standard of living
b) The extent of inflation in the prices of consumer goods
c) The increasing per capita income
d) The growth of the economy
Answer: b) The extent of inflation in the prices of consumer goods
6. Inflation occurs when aggregate supply is:
a) More than aggregate demand
b) Less than aggregate demand
c) Equal to aggregate demand
d) None of these
Answer: b) Less than aggregate demand
7. The process of curing inflation by reducing money supply is called:
a) Cost-push inflation
b) Demand-pull inflation
c) Disinflation
d) Reflation
Answer: c) Disinflation
8. Cheap money means:
a) Low rate of interest
b) Low level of saving
c) Low level income
d) Excess of Black Money
Answer: a) Low rate of interest
9. Deflation is a situation in which:
a) The value of money is falling
b) The price of goods is increasing
c) The value of money is increasing
d) The price level is stagnant
Answer: c) The value of money is increasing
10. Pump priming should be resorted to at a time of:
a) Inflation
b) Deflation
c) Stagflation
d) Reflation
Answer: b) Deflation
11. Which of the following brings out the ‘Consumer Price Index Number’ for Industrial workers?
a) RBI
b) The Labour Bureau
c) Commerce Department
d) Ministry of Finance
Answer: b) The Labour Bureau
12. What is the moderate degree of controlled inflation called?
a) Reflation
b) Stagflation
c) Hyper-inflation
d) Disinflation
Answer: a) Reflation
13. Which of the following groups suffer the most from inflation?
a) Debtors
b) Creditors
c) Business Class
d) Holders of Real Assets
Answer: b) Creditors
14. Inflation can be checked by:
a) Increasing exports
b) Increasing money supply
c) Increasing government expenditure
d) Decreasing money supply
Answer: d) Decreasing money supply
15. Which is NOT a measure undertaken by the government to check inflation?
a) Increase in consumption
b) Increase in production
c) Reduction in deficit financing
d) Taxation measures
Answer: a) Increase in consumption
16. The term stagflation refers to a situation where:
a) Growth has no relation with the change in prices
b) Rate of growth and prices both are decreasing
c) Rate of growth is faster than the rate of price increase
d) Rate of growth is slower than the rate of price increase
Answer: d) Rate of growth is slower than the rate of price increase
17. Stagflation is characterized by:
a) Stagnant employment and deflation
b) Deflation and rising unemployment
c) Inflation and rising employment
d) Inflation and rising unemployment
Answer: d) Inflation and rising unemployment
18. Inflation exists when:
a) There is a general increase in the prices over time
b) There are periodic decreases in the price level
c) There are continuous increases in the output level over time
d) There is a fall in the value of money
Answer: a) There is a general increase in the prices over time