MCQs on Inflation, which are covered in this chapter, relate to the topic, Inflation. MCQs on Inflation Test contains 20 questions. Answers to MCQs on Inflation are available after clicking on the answer.
1.When prices are falling continuously, the phenomenon is called:
(a) Inflation
(b) Stagflation
(c) Deflation
(d) Reflation
Answer
Answer: (c) Deflation
2.When too much money chases too few goods, the resulting Inflation is called:
(a) Deflation
(b) Demand-pull Inflation
(c) Cost push inflation
(d) Stagflation
Answer
Answer: (b) Demand-pull Inflation
3.Cause of Inflation in India is / are:
(a) Deficit financing
(b) Erratic agriculture growth
(c) Inadequate rise in industrial production
(d) All of the above
Answer
Answer: (d) All of the above
4.Stagflation means:
(a) Inflation with stagnation
(b) Recession with stagnation
(c) Inflation galloping like stage
(d) Inflation & increasing output
Answer
Answer: (a) Inflation with stagnation
5.Which is the most effective quantitative method to control inflation in the economy?
(a) Bank rate policy
(b) Selective credit control
(c) Cash reserve ratio
(d) Both (a) and (b)
Answer
Answer: (c) Cash reserve ratio
MCQs on Inflation – Economics MCQs
6.The maximum inflation at _____ was recorded for the year 1966-67 :
(a) 12.1
(b) 13.9
(c) 8.0
(d) 10
Answer
Answer: (b) 13.9
7.Inflation rate as per April’07 was:
(a) 6.39%
(b) 6%
(c) 6.79%
(d) 4.7%
Answer
Answer: (A) 6.39%
8.Which measures are followed by the government for handling inflation?
(a) Monetary measures
(b) Fiscal measures
(c) Controlling Investments
(d) All of these
Answer
Answer: (b) Fiscal measures
9.Inflation is measured on the basis of:
(a) Wholesale price index
(b) Consumer price index
(c) Marshall’s index
(d) All of these
Answer
Answer: (b) Consumer price index
10.When price increases due to increase in factor prices it is ______.
(a) Demand pull inflation
(b) Cost pull inflation
(c) Stagflation
(d) None of the above.
Answer
Answer: (b) Cost pull inflation
MCQs on Inflation – Economics MCQs
11.Fiscal policy refers to the policy relating to:
(a) Public Revenue
(b) Public Expenditure
(c) Public debt
(d) All of the above.
Answer
Answer: (d) All of the above
12.Demand pull inflation is caused by :
(a) Increased money expenditure
(b) Increased cost of factors
(c) Both
(d) None.
Answer
Answer: (a) Increased money expenditure
13.Stagflation means.
(a) Inflation with deflation
(b) Inflation with recession
(c) Inflation galloping with a stag
(d) Deflation with recession
Answer
Answer: (c) Inflation galloping with a stag
14.Upward Revision of administered prices results in _______.
(a) Demand – Pull inflation
(b) Cost – Push inflation
(c) Stagflation
(d) Deflation
Answer
Answer: (b) Cost – Push inflation
15.In India, Inflation is measured by ________.
(a) Consumer Price Index
(b) Agricultural price Index
(c) Industrial Price Index
(d) Wholesale Price Index.
Answer
Answer: (d) Wholesale Price Index.
MCQs on Inflation – Economics MCQs
16.The combined phenomenon of stagnation and inflation is ______.
(a) Deflation
(b) Demand – pull inflation
(c) Cost – push inflation
(d) Stagflation
Answer
Answer: (d) Stagflation
17.Purchasing power of money falls when:
(a) Price level rises
(b) Income falls
(c) Price level falls
(d) Money supply falls.
Answer
Answer: (a) Price level rises
18.Which of the following groups suffers the most from inflation?
(a) Debtors
(b) Creditors
(c) Businessmen
(d) Holders of real assets.
Answer
Answer: (d) Holders of real assets.
19.To reduce the value of domestic currency in terms of foreign currency is known as:
(a) Appreciation
(b) Devaluation
(c) Depreciation
(d) None of the above.
Answer
Answer: (b) Devaluation
20.Purchasing power of money falls when________.
(a) Price level increases
(b) Price level decreases
(c) Income level increases
(d) Money supply falls.
Answer
Answer: (a) Price level increases
3 thoughts on “MCQs on Inflation – Chapter 6 – Economics MCQs”
Explain demand pull,,,and cost push
when demand is more than supply this is demand push push inflation. Cost push is because of increase of prices of some important goods and supply where no suitable alternative is available. Higher prices result in increased production cost.
generally inflation means the prices of the commodity will be increasing. which may be happen by two reasons. demand pull and cost push. demand pull inflation is shortage of products or commodity, which is happen through naturally and sometimes artificially, natural shortage is due to natural calamities and artificial shortage is made by some of the marketers are to sell their commodities at higher prices. so that the aggregate demand is more than the available commodities in the market it is called as demand pull inflation.
The cost push inflation is the prices of commodities will be increasing due to the high cost of factors of production like raw materials, labour wages, capital and buying equipments and etc., so due to these prices the cost of production of the commodities will be increasing so, that the manufacturer will fixed higher prices for the commodity.hence it is called cost push inflation