Inflation & Productivity MCQs

Option A: Nominal wages are equal to expected wages

Option B: Real wages are back at equilibrium level

Option C: Nominal wages are growing faster than inflation

Option D: Inflation is higher than the growth of nominal wages

Correct Answer: Nominal wages are equal to expected wages ✔

Option A: Costs of finding better rates of return

Option B: Costs of altering price lists

Option C: Costs of money increasing its value

Option D: Costs of revaluing the currency

Correct Answer: Costs of altering price lists ✔

Option A: Shift aggregate demand

Option B: Shift aggregate supply

Option C: Reduce the natural rate of unemployment

Option D: Increase the productivity of employees

Correct Answer: Shift aggregate supply ✔

Option A: An outward shift of aggregate demand- and demand-pull inflation

Option B: An outward shift of aggregate demand and cost push inflation

Option C: An outward shift of aggregate supply and demand-pull inflation

Option D: An outward shift of aggregate supply and cost push inflation

Correct Answer: An outward shift of aggregate demand- and demand-pull inflation ✔

Option A: An increase in costs

Option B: A reduction in interest rate

Option C: A reduction in government spending

Option D: An outward shift in aggregate supply

Correct Answer: A reduction in interest rate ✔

Option A: neither borrowers nor lenders will gain because the nominal interest rate has been fixed by contract

Option B: None of these answers

Option C: borrowers will gain at the expense of lenders

Option D: lenders will gain at the expense of borrowers

Correct Answer: lenders will gain at the expense of borrowers ✔

Option A: The nominal rate of interest is 15 percent and the inflation rate is 14 percent

Option B: The nominal rate of interest is 20 percent and the inflation rate is 25 percent

Option C: The nominal rate of interest is 12 percent and the inflation rate is 9 percent

Option D: The nominal rate of interest is 5 percent and the inflation rate are 1 percent

Correct Answer: The nominal rate of interest is 5 percent and the inflation rate are 1 percent ✔

Option A: none of these answers

Option B: The nominal interest rate is the inflation rate minus the real interest rate

Option C: The real interest rate is the nominal interest rate minus the inflation rate

Option D: The nominal interest rate is the real interest rate minus the inflation rate.

Correct Answer: The real interest rate is the nominal interest rate minus the inflation rate ✔

Option A: 4 percent

Option B: 10 percent

Option C: -4 percent

Option D: 3 percent

Correct Answer: 4 percent ✔

Option A: Rs459.25

Option B: Rs418.75

Option C: Rs300

Option D: None of these

Correct Answer: Rs300 ✔

Option A: consumer production

Option B: Products purchased by the typical consumer

Option C: raw materials purchased by firms

Option D: total current production

Correct Answer: Products purchased by the typical consumer ✔

Option A: 5.4 percent

Option B: 30.7 percent

Option C: You can’t tell without knowing the base year

Option D: 5.1 percent

Correct Answer: 5.4 percent ✔

Option A: The balance of trade

Option B: The rate of growth in an economy

Option C: The rate of price increase

Option D: Unemployment

Correct Answer: The rate of price increase ✔

Option A: Nominal wages have risen less than inflation

Option B: Nominal wages have risen at the same rate as inflation

Option C: Nominal wages have risen more than inflation

Option D: Nominal wages have risen less than unemployment

Correct Answer: Nominal wages have risen more than inflation ✔

Option A: An appreciation of the currency

Option B: A revaluation of the currency

Option C: A depreciation of the currency

Option D: Lower inflation abroad

Correct Answer: Lower inflation abroad ✔

Option A: Aggregate supply is perfectly elastic

Option B: Aggregate supply is Perfectly inelastic

Option C: Aggregate supply is unit elastic

Option D: Aggregate supply is relatively elastic

Correct Answer: Aggregate supply is Perfectly inelastic ✔

Option A: Reduce the cost of living

Option B: Reduce the standard of living

Option C: Reduce the price of products

Option D: Reduce the purchasing power of a rupee

Correct Answer: Reduce the price of products ✔

Option A: none of these answers

Option B: Workers will gain at the expense of firms

Option C: neither workers nor firms will gain because the increase in wages in fixed in the labor agreement

Option D: firms will gain at the expense of workers.

Correct Answer: firms will gain at the expense of workers. ✔

Option A: The nominal rate of interest is 12 percent and the inflation rate is 9 percent

Option B: The nominal rate of interest is 20 percent and the inflation rate is 25 percent

Option C: The nominal rate of interest is 5 percent and the inflation rate is 1 percent

Option D: The nominal rate of interest is 15 percent and the inflation rate is 14 percent

Correct Answer: The nominal rate of interest is 20 percent and the inflation rate is 25 percent ✔

Option A: 3/8 percent

Option B: 5 percent

Option C: 11 percent

Option D: 24 percent

Correct Answer: 11 percent ✔

Option A: fallen

Option B: You can’t tell without knowing the base year

Option C: risen

Option D: stayed the same

Correct Answer: risen ✔

Option A: none of these answers

Option B: substitution bias

Option C: base year bias

Option D: bias due to unmeasured quality change

Correct Answer: substitution bias ✔

Option A: An increase in the price of BMWs produced in Germany and sold in the Pakistan

Option B: An increase in the price of Peugeots produced in the Pakistan

Option C: An increase in the price of helicopters purchased by the Pak Navy.

Option D: An increased in the Price of domestically produced armoured vehicles sold exclusively to Iran

Correct Answer: An increase in the price of BMWs produced in Germany and sold in the Pakistan ✔

Option A: All of these answers are used to measure inflation.

Option B: consumer price index

Option C: Producer price index

Option D: GDP deflector

Correct Answer: finished goods price index ✔