Inflation MCQ for RBI Grade B, SSC CGL, UPSC, Banking

Dear aspirants,
We are presenting you the Inflation MCQ for RBI Grade B Finance Section of the exam.These questions will cover the important concepts of inflation which is very important from exam point of view. Also do read the answers provided at the end of quiz. Before attempting the quiz do read article on Inflation.

Inflation MCQ for RBI Grade B

Q1. Which among the following is exact opposite of inflation?

  1. Stagflation
  2. Disinflation
  3. Hyperinflation
  4. Deflation

Q2. Which out of the following is phenomenon that leads to Demand-Pull Inflation?

  1. It is a situation when aggregate demand in an economy outpaces aggregate supply
  2. It is a situation of persistent rise in inflation along with dip in growth and increase in unemployment
  3. It is a situation caused by an increase in prices of inputs like labour, raw material etc
  4. It is a situation when a nation experiences very high and accelerating inflation.

Q3. Which out of the following is phenomenon that leads to Cost-Push Inflation?

  1. It is a situation when aggregate demand in an economy outpaces aggregate supply
  2. It is a situation of persistent rise in inflation along with dip in growth and increase in unemployment
  3. It is a situation caused by an increase in prices of inputs like labour, raw material etc
  4. It is a situation when a nation experiences very high and accelerating inflation.

Q4. Inflationary gap said to exist when _________?

  1. Real GDP > Potential GDP
  2. Real GDP < Potential GDP
  3. Real GDP = Potential GDP
  4. Unemployment rate > natural rate of unemployment

Q5. Deflationary gap said to exist when _________?

  1. Real GDP > Potential GDP
  2. Real GDP < Potential GDP
  3. Real GDP = Potential GDP
  4. Unemployment rate > natural rate of unemployment

Q6. Which out of the following is phenomenon that leads to Stagflation?

  1. It is a situation when aggregate demand in an economy outpaces aggregate supply
  2. It is a situation of persistent rise in inflation along with dip in growth and increase in unemployment
  3. It is a situation caused by an increase in prices of inputs like labour, raw material etc
  4. It is a situation when a nation experiences very high and accelerating inflation.

Q7. Which out of the following is phenomenon that leads to Hyperinflation?

  1. It is a situation when aggregate demand in an economy outpaces aggregate supply
  2. It is a situation of persistent rise in inflation along with dip in growth and increase in unemployment
  3. It is a situation caused by an increase in prices of inputs like labour, raw material etc
  4. It is a situation when a nation experiences very high and accelerating inflation.

Q8. Which out of the following is phenomenon that leads to Deflation?

  1. It is a decrease in the rate of inflation – a slowdown in the rate of increase of the general price level of goods and services
  2. It is a situation of persistent rise in inflation along with dip in growth and increase in unemployment
  3. It is the situation where prices fall continuously or have tendency to fall
  4. It represents price rise in all goods and services but does not include articles from food and energy sector.

Q9. Which out of the following is phenomenon that leads to Disinflation?

  1. It is a decrease in the rate of inflation – a slowdown in the rate of increase of the general price level of goods and services
  2. It is a situation of persistent rise in inflation along with dip in growth and increase in unemployment
  3. It is the situation where prices fall continuously or have tendency to fall
  4. It represents price rise in all goods and services but does not include articles from food and energy sector.

Q10. Which out of the following is termed as Core Inflation?

  1. It is a decrease in the rate of inflation – a slowdown in the rate of increase of the general price level of goods and services
  2. It is a situation of persistent rise in inflation along with dip in growth and increase in unemployment
  3. It is the situation where prices fall continuously or have tendency to fall
  4. It represents price rise in all goods and services but does not include articles from food and energy sector.

Answers

  1. 4
    Deflation is the situation where prices fall continuously or have tendency to fall whereas Inflation is sustained rise in the general level of prices of goods and services over time
  2. 1
    it is a situation when either demand increases for the same level to supply leading increase in price of goods and service or the supply of goods and services decreases for the same level of demand leading to inflation. Thus demand outpaces the supply.
  3. 3
    It is the phenomenon of increase in factor cost i.e. wages, rent, raw material led to increase in cost of production causing the inflation
  4. 1
    An inflationary gap is a macroeconomic concept that describes the difference between the current level of real gross domestic product (GDP) and the anticipated GDP that would be experienced when an economy is at full employment, also referred to as the potential GDP. The inflationary gap is so named because the relative increase in real GDP causes an economy to increase its consumption. If real GDP > Potential real GDP (full employment GDP), then an inflationary gap exist.
  5. 2
    When the potential GDP is higher than the real GDP, the gap is referred to as a deflationary gap.
  6. 2
    Stagflation is a situation of persistent rise in inflation along with dip in growth and increase in unemployment.
  7. 4
    Hyperinflation is a situation when a nations experiences very high and accelerating inflation where annual rate of inflation runs into millions or trillions in a very short period of time.
  8. 3
    Deflation is the situation where prices fall continuously or have tendency to fall
  9. 1
    Disinflation is a fall in the inflation rate. It means that the general price level is increasing at a slower rate.
  10. 4
    Core Inflation represents price rise in all goods and services but does not include articles from food and energy sector. This is a measure of inflation strips seasonal and volatile commodities

We hope you like this Inflation MCQ for RBI Grade B exam. You may also like to read following MCQs for RBI Grade B exam: 

Click to go to RBI Grade B Preparation Page  | Click to read more such quizzes

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