Question

35. Inflation means that: A. all prices are rising, but at different rates. B. all prices are rising and at the same rate. C.prices on average are rising, although some particular prices may be falling. D. real incomes are rising 36. The annual rate of inflation can be found by subtracting A. the real income from the nominal income. B. last year's price index from this year's price index C. this year's price index from last year's price index and dividing the difference by this year's price index. D. last year's price index from this year's price index and dividing the difference by last year's price index. 37. If the Consumer Price Index was 170 in one year and 180 in the next year, then the rate of inflation is approximately A. 5.5 percent B. 5.9 percent C. 6.3 percent D. 7.2 percent 38. Demand-pull inflation: A. occurs when prices of resources rise, pushing up costs and the price level. B. occurs when total spending exceeds the economy's ability to provide output at the existing price level. C. occurs only when the economy has reached its absolute production capacity. D. is also called cost-push inflation. 39. Cost-push inflation may be caused by: A. a decline in per unit production costs. C. a negative supply shock. B. a decrease in wage rates. D. an increase in resource availability. 40. Rising per-unit production costs are most directly associated with: A frictional unemployment B. structural unemployment. C. demand-pull inflation D. cost-push inflation. 41. Real income is found by: A. dividing nominal income by 70. B. multiplying nominal income by 1.03. C. dividing the price index (in hundredths) by nominal income. D. dividing nominal income by the price index in hundredths). 42. If the average level of nominal income in a nation is S44,000 and the price level index is 175, the average real income would be about: A. $18,857 B. $25,143 C. $44,000 D. S77,000 43. Which of the following formulas is correct? Percentage change in: A price level approximates percentage change in real income minus percentage change in nominal income. B. real income approximates percentage change in nominal income minus percentage change in price level C. nominal income approximates percentage change in price level minus percentage change in real income. D. real income approximates percentage change in price level minus percentage change in nominal income.

Answer 1

35.Inflation means that the general price level in the country is rising but the rate of price rise can be different.

Answer-A

36.Inflation=(CPI of current year-CPI last year)/CPI of last year.

Answer-D

37.Inflation={(180-170)/170}*100

Inflation rate=5.5%

Answer-A

38.Demand pull inflation is the result of price rise due to excessive demand.

Answer-B