Most Important Questions on Inflation

By Saroj Singh|Updated : March 26th, 2021

While preparing for exams, revision is the key to success. So for the aspirants who are preparing for various state exams, here are the Most Important Questions on Capital Market. These questions can be fruitful in the last-minute revision of Capital Market. These questions will help students to fetch more marks in the exams.

Also, Sectional tests help understand the concept better. It is recommended that after you finish every topic or component of the syllabus do solve Questions that are either asked in the previous year papers or given in a mock. This article including only questions is aimed to make you understand and attempt a particular syllabus domain effectively.

Most Important Questions on Inflation

1. The economic situation in which inflation rate is high, slow economic growth and relatively high unemployment is known as _______________.

(a) Inflation

(b) Deflation

(c) Stagflation

(d) Reflation

Ans. C

2. Which of the following statements is correct with respect to measurement of Inflation in India?

(a) Producer Price Index has been recently introduced in India to measure Inflation

(b) Consumer Price Index is measured by Department of Economic Affairs, Ministry of Finance

(c) Wholesale Price Index is measured by Department of Industrial Policy and Promotion, Ministry of Commerce and Industries

(d) WPI data is published on a fortnight basis

Ans. C

3. Which of the following factors was responsible for inflation in India?

(a) Reserve Bank India raising the interest rates very frequently

(b) High population growth

(c) Sudden rise in prices of oil worldwide

(d) None of these

Ans. C

4. Which of the following are the two methods to calculate inflation rate in India?

(a) Market Price Index and Consumer Price Index

(b) Consumer Price Index and Economic Price Index

(c) Wholesale Price Index and Consumer Price Index

(d) Wholesale Price Index and Market Price Index

Ans. C

5. In what respect, core inflation is different from headline inflation?

(a) It excludes fuel inflation

(b) It excludes food inflation

(c) It includes fuel and food inflation

(d) Both A and B

Ans. C

6. Which of the following Ministry compiles the data of inflation in India?

(a) Ministry of Finance

(b) Ministry of Corporate Affairs

(c) Ministry of Statistics & Programme Implementation

(d) Ministry of Consumer Affairs, Food and Public Distribution

Ans. C

7. Which index is used by RBI as the key measure of inflation for the policy purposes?

(a) Wholesale Price Index (WPI)

(b) Consumer Price Index (CPI) (combined)

(c) Consumer Price Index (CPI) (Rural)

(d) Producer Price Index (PPI)

Ans. B

8. An indefinite rise in Inflation is impossible without an increase in the

(a) aggregate output

(b) investment

(c) rate of interest

(d) money supply

Ans. D

9. 'Galloping Inflation' is also known as _____.

(a) Creeping Inflation

(b) Walking Inflation

(c) Running Inflation

(d) Hyper Inflation

Ans. D

10. Inflation would be affected if:

(a) Pressure on prices reduce

(b) Private sector demands are met

(c) Fiscal deficit is reduced

(d) Private sector wages and demand work in accordance

Ans. D

11. The type of inflation which does not consider the inflation in food and fuel is known as

(a) Headline Inflation

(b) Core Inflation

(c) Consumer Inflation

(d) Real Inflation

Ans. B

12. Which of the following is the highlight of the downward drift of inflation?

(a) Increased industrial growth

(b) Improved accessibility of services

(c) Unfrequented hike in share markets

(d) Constant reduction in food prices

Ans. D

13. In which types of inflation, prices shoot up overnight?

(a) Bottleneck Inflation

(b) Galloping Inflation

(c) Hyperinflation

(d) Shoot Inflation

Ans. C

14. Which amongst the following is the slowest/mildest inflation rate?

(a) Walking Inflation

(b) Creeping Inflation

(c) Chronic Inflation

(d) Galloping Inflation

Ans. B

15. Which of the following is called the Headline inflation?

(a) WPI inflation

(b) CPI inflation

(c) IPP inflation

(d) DPI inflation

Ans. A 

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