Inflation Questions with solutions MCQs

1. The cost inflation index is mainly used to compute :

A

Business income

B

Long term capital gain

C

Short term capital gain

D

Income from other sources

Inflation General Economics
Correct Answer : B
Explanation :

A Cost Inflation Index table is used to calculate the long term capital gains from a transfer or sale of capital assets.

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2. According to the economist Coulborn, too much money chasing too few goods is

A

Globalization

B

Inflation

C

Liberalization

D

Economic growth

inflation General Economics
Correct Answer : B
Explanation :

According to economist Coulborn, "too much money chasing too few goods" is a description of inflation. This is a definition of it as a monetary phenomenon rather than a phenomenon of rising prices. This is a common view perspective of the situation.

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3. Which type of inflation is caused due to excessive growth of money supply in the economy?

A

Cost push inflation

B

Cost pull inflation

C

Demand pull inflation

D

Demand push inflation

inflation General Economics
Correct Answer : A
Explanation :

According to Keynesian economists, inflation comes in two varieties: demand-pull and cost-push. Demand-pull inflation occurs when consumers demand goods, possibly because of the larger money supply, at a rate faster than production. Cost-push inflation occurs when the input prices for goods tend to rise, possibly because of a larger money supply, at a rate faster than consumer preferences change.

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4. Which of the following is NOT a type of inflation on the basis of speed?

A

Running inflation

B

Scrolling inflation

C

Galloping inflation

D

Walking inflation

inflation General Economics
Correct Answer : B
Explanation :

Types Of Inflation On The Basis Of Speed:
1.Creeping inflation: the inflationary rate is less than 2% that means prices are increasing gradually.
2.Walking inflation: the inflationary rate of a country is around 5% little more than creeping.
3.Running inflation: the rate of growth in prices are more i.e. the inflation is growing at the rate of 10%.
4.Galloping inflation: higher growth rate compared to the earlier stages i.e. the change is around 25%.

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