Business Cycle, inflation and deflation
On This Page
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