Quiz on Inflation and Unemployment

Cost-push inflation is due to

• economy operating at full of employment.

• excess total consumer spending.

• increase in prices of resources.

• too much money chasing too few goods.

Cost-push inflation might be caused by

• falling in component costs

• falling in labour costs

• higher indirect taxes imposed by government

• lower direct taxes imposed by government

Inflation can be measured by the

• change in the consumer price index

• change in the price of specific commodity

• percentage change in the consumer

• percentage change in the price of specific commodity

The suitable monetary policy to overcome inflation is by

• the purchase of bonds by the central bank.

• reducing the interest rate on loans.

• reducing money supply in money market.

• promoting hire purchase activities.

The main cause of demand-pull inflation is

• increase in aggregate demand

• increase in cost of production

• excessive wage increases

• abundant production of goods and services

An appropriate policy to reduce demand pull inflation is

• reducing taxes.

• a tight monetary policy.

• an easy monetary policy.

• increasing government spending.

The unemployment rate is

• the percentage of the total population

• the percentage of the labour force which is out of work

• the ratio of unemployment to employed worker

• the percentage of employed workers out of the total population

What is the meaning of a discouraged worker?

• People who are temporarily out of jobs or because they are sacked.

• People who are retrenched because of economy structure changes.

• People in the labour force looking for a job and are currently not working.

• People who leaves the labour force after unsuccessfully searching for a job for a certain period of time.

The government can reduce unemployment or reduce inflation by

• manipulating aggregate demand.

• manipulating the availability of natural resources.

• manipulating the availability of capital goods.

• curbing the level of immigration.

Consider an economy made up of 100 people, 50 of whom hold jobs, 10 of whom are looking for work, and 15 of whom are retired. The unemployment rate is approximately

• 10 percent.

• 12 percent.

• 17 percent.

• 20 percent.