Business Cycle, inflation and deflation

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This set of Business Economics Multiple Choice Questions & Answers (MCQs) focuses on Business Cycle, inflation and deflation

Q1 | What is Cost-Push inflation?
  • increasing money supply
  • increasing indirect tax
  • population increase
  • expenditure increase unnecessarily.
Q2 | Inflation is the state in which ..............................
  • the value of money decreases
  • the value of money increases
  • the value of the money increases first and then decreases
  • the value of money decreases first and increases later
Q3 | Which of the following class will not be negatively affected by the higher inflation?
  • the consumer class
  • the debtor class
  • pensioner class
  • business class
Q4 | Which of the following is an effect of inflation?
  • erosion in purchasing power
  • affects relative price of goods
  • increase in inequalities of income
  • all the above
Q5 | The trough of a business cycle occurs when _____ hits its lowest point.
  • inflation
  • the money supply
  • aggregate economic activity
  • the unemployment rate
Q6 | . When aggregate economic activity is increasing, the economy is said to be in
  • an expansion.
  • a contraction.
  • a peak.
  • a turning point.
Q7 | In a boom:
  • unemployment is likely to fall
  • prices are likely to fall
  • demand is likely to fall
  • imports are likely to fall
Q8 | Peaks and troughs of the business cycle are known collectively as
  • volatility.
  • turning points.
  • equilibrium points.
  • real business cycle events.
Q9 | When aggregate economic activity is declining, the economy is said to be in
  • a contraction.
  • an expansion.
  • a trough.
  • a turning point.
Q10 | Industries that are extremely sensitive to the business cycle are the
  • durable goods and service sectors.
  • nondurable goods and service sectors.
  • capital goods and nondurable goods sectors.
  • capital goods and durable goods sectors.
Q11 | Economists use the term shocks to mean
  • unexpected government actions that affect the economy.
  • typically, unpredictable forces that have major impacts on the economy.
  • sudden rises in oil prices.
  • the business cycles.
Q12 | The government spending multiplier is as higher as:
  • higher is the government spending
  • higher is the mpc
  • lower is the mpc
  • lower is the tax revenue
Q13 | Point out which of the following is not an instrument of fiscal policy:
  • an increase in the interest rate
  • a cut in unemployment compensation
  • an increase in tobacco taxes
  • a cut in the marginal rates of irpf
Q14 | The function of investment spending shifts to the left if:
  • the interest rate rises
  • the interest rate falls
  • business expectations improve
  • business expectations get worse
Q15 | An increase in the interest rate1
  • shifts the aggregate demand curve to the left
  • shifts the aggregate demand curve to the right
  • has no effect
  • moves the economy along the aggregate demand curve
Q16 | As higher is the MPS
  • lower is the multiplier.
  • higher is the investment spending
  • higher is the equilibrium income.
  • all the answers are right
Q17 | To increase the money supply, the bank central could:
  • cut taxes
  • purchase bonds in the open-market
  • encourage people to held more cash (currency in circulation)
  • increase the government spending
Q18 | The variable that connect the market of money and the market of goods via investment spending is:
  • the mpc
  • the interest rate
  • the mps
  • the cpi
Q19 | Point out the monetary policy instrument:
  • an increase in direct taxes
  • open-market operations
  • freezing pensions
  • a cut in government purchase of goods and services
Q20 | Monetary Policy is a regulatory policy by which the ______or monetary authority of a country controls thesupply of money, availability of bank credit and cost of money that is the rate of interest:
  • central bank (rbi)
  • sbi
  • iba
  • none of these
Q21 | _______controls the supply of money and bank credit:
  • rbi
  • indian banking association
  • sebi
  • none of these
Q22 | The main objective of monetary policy in India is_______:
  • growth with stability
  • reduce poverty and achieve stability
  • overall monetary stability
  • none of these
Q23 | The Cash Reserve Ratio is an effective instrument of credit control. Under the RBI Act, 1934 every______bank has to keep certain minimum cash reserves with RBI:
  • public bank
  • commercial bank
  • industrial and agricultural banks
  • none of these
Q24 | If RBI wants to increase the credit flow it buys ______:
  • government securities
  • shares and debentures
  • other local and short-term securities
  • none of these
Q25 | Trade between two countries is called
  • Internal trade
  • Intra-Country trade
  • Intra-State Trade
  • International Trade