Unit 4.8: Inflation and deflation

What is a cause of demand-pull inflation?

• Reduction on business investments

• Rise in import spending

• Fall in aggregate demand

• Rise in consumer spending

Which of the following is most likely to gain from deflation?

• Lenders

• Firms

• Borrowers

• Workers

Which of the following are policies are used to control deflation?

• Supply-side policy

• Quantitative easing

• Contractionary monetary policy

• Contractionary fiscal policy

Which of the following is used to measure inflation?

• Consumer price index (CPI)

• Human development index (HDI)

• Real GDP per head

• Basket of goods

Which of the following is not a policy used to control deflation?

• Expansionary monetary policy

• Supply-side policy

• Expansionary fiscal policy

• Quantitative easing

What is not an affect of deflation on firms?

• Increase in wages

• Reduced business confidence

• Increased in cash held

• Decrease in investments

Which of the following is increased due to inflation?

• Purchasing power

• Price of imports

• Cost of living

• Competitiveness of exports

Which of the following is most likely to cause cost-push inflation?

• Decrease in the cost of firms

• Increase in aggregate demand

• Decrease in spending on imports

• Increase in wages

How does the economy benefit from deflation?

• Increased consumer spending

• Reduced unemployment from more jobs

• Increased competitiveness of exports

• Increased cost of living

Which of the following economic stages have the lowest inflation?

• Growth

• Boom

• Recession

• Slump