Business Cycle, inflation and deflation MCQs

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