ECONOMICS

INFLATION
1. During periods of inflation, tax rates should (SSC CGL 2nd 7. High inflation levels in the economy leads to _______ in
Sit. 2010) the supply of money.
(a) increase (a) Increase
(b) decrease (b)Decrease
(c) remain constant (c) No change
(d) fluctuate (d) None of the above

2. When there is an official change in the exchange rate of 8. Which of the following concepts is the opposite of
domestic currency, then it is called: (SSC CGL 1st Sit. 2011) inflation?
(a) Appreciation (a) Deflation
(b) Depreciation (b) Stagflation
(c) Revaluation (c) Recession
(d) Deflation (d)None of the above

3. Inflation redistributes income and wealth in favour of: (SSC 9. A government resorts to __________ to reduce inflation.
CGL 1st Sit. 2011) (a) Cuts in government spending
(a) Pensioners (b) Increase in government expenditure
(b) Poor (c) Reduction in repo rate
(c) Middle class (d) None of the above
(d) Rich
10. When the price levels of goods and services are falling
4. If the inflation in an economy is rising steadily, the Central continuously, this phenomenon is called _________.
Bank might (SSC CGL 1st Sit. 2019) (a) Deflation
(a) increase the repo rate (b) Stagflation
(b) decrease the reverse repo rate (c) Inflation
(c) decrease the repo rate (d) None of the above
(d) keep the repo rate unchanged
11. If too much money is chasing too few goods, the
5. A rise in the general level of prices may be caused by resulting inflation is known as __________.
(A) An increase in the money supply (a) Stagflation
(B) A decrease in the aggregate level of output (b) Cost-push inflation
(C) An increase in the effective demand (c) Demand-pull inflation
(a) Only A (d) None of the above
(b) Only C
(c) Only B 12. _____ is an effective method to control inflation in the
(d) All A, B and C economy.
(a) Cash reserve ratio
6. Temporary control of inflation can be effected by (b) Selective control of credit
(a) Reducing prices (c) Bank rate policy
(b) Increasing prices (d) None of the above
(c) Increasing the rate of taxes
(d) Restricting the growth of money supply 13. When inflation is a result of an increase in the price of

ECONOMICS BY :- CHANDAN KUMAR PODDAR

factors of production, the result is ________. (b) Price of the commodities increases
(a) Stagflation (c) No effect
(b) Cost-push inflation (d) First the price decreases later on increases
(c) Demand-pull inflation
(d) None of the above 21. When there is high inflation in the economy, how will it
affect the supply of money in the economy?
14. The combination of stagnation and inflation is known as (a) No effect on the money supply
_____. (b) Supply of money decreases
(a) Stagflation (c) Supply of money increases
(b) Cost-push inflation (d) None of the above
(c) Demand-pull inflation
(d) None of the above 22. Which of the following concept is just opposite to
deflation?
15. When the central government reduces the value of the (a) Stagflation
domestic currency in terms of foreign currency, this (b) Inflation
phenomenon is called ______. (c) Recession
(a) Depreciation (d) Disinflation
(b) Appreciation
(c) Devaluation 23. Which of the following measure is adopted to reduce
(d) None of the above inflation?
(a) Reduction in bank rate
16. The Reserve Bank of India (RBI) can take the measure of (b) Reduction in Repo rate
_________ to control inflation within the country. (c) Increase in government expenditure
(a) Rationing of credit (d) Cuts in government spending
(b) Introducing a progressive tax system
(c) Improving profits of the public sector 24. What is the base year for measuring inflation at
(d) Controlling public expenditure wholesale Prices Index (WPI) in India?
(a) 2004-05
17. The Consumer Price Index helps to measure the degree to (b) 2001-02
which ___________. (c) 2011-12
(a) Consumer prices have risen relative to the wage level in the (d) 2014-15
economy
(b) Distribution of income between two different sets of 25. Devaluation of currency helps to promote:
income recipients at the same point in time (a) National Income
(c) Distribution of income between two different sets of (b) Savings
income recipients during different periods (c) Imports at lower cost
(d) None of the above (d) Exports

18. The share of food items within India’s total consumption 26. The term 'devaluation' means:
expenditure has reduced within the last two decades (a) Reducing the value of a currency in terms of another
because of _________. currency
(a) Increase in people’s income levels (b) Increasing the value of a currency
(b) The availability of foodgrains has declined in the country (c) Revising the value of a currency
(c) Increase in the share of non-food items (d). None of the above
(d) None of the above
27. The major aim of devaluation is to:
19. Inflation is the state in which .............................. (a) encourage imports
(a) The value of money decreases (b) encourage
(b) The value of money increases (c) encourage both exports and imports
(c) The value of the money increases first and then decreases (d) discourage both exports and imports
(d) The value of money decreases first and increases later
28. Inflation is caused by :
20. How inflation affects the price of the commodities? (a) increase in money supply
(a) Price of the commodities decreases (b) increase in production
ECONOMICS BY :- CHANDAN KUMAR PODDAR
(c) decrease in production (d) stagflation
(d) both (a) and (c)
30. A country generally resorts to devaluation of its currency
29. When too much money is chasing too few goods, the to :
situation is known as (a) convert deficit in her balance of payments
(a) deflation (b) eliminate surplus in her balance of payments
(b) recession (c) the conditions laid down by the I.M.F.
(c) inflation (d) increase her overall imports

ANSWER KEY :-
1. A 2. C 3. D 4. A 5. D

6. A 7. A 8. A 9. A 10. A

11. C 12. A 13. B 14. A 15. C

16. A 17. C 18. A 19. A 20. B
21. C 22. B 23. D 24. C 25. D
26. A 27. B 28. D 29. C 30. A

ECONOMICS BY :- CHANDAN KUMAR PODDAR