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B Com Exam  >  B Com Test  >  Macro Economics  >  Test: Introduction & Causes of Inflation - B Com MCQ

Introduction & Causes of Inflation - Free MCQ Practice Test with solutions,


MCQ Practice Test & Solutions: Test: Introduction & Causes of Inflation (10 Questions)

You can prepare effectively for B Com Macro Economics with this dedicated MCQ Practice Test (available with solutions) on the important topic of "Test: Introduction & Causes of Inflation ". These 10 questions have been designed by the experts with the latest curriculum of B Com 2026, to help you master the concept.

Test Highlights:

  • - Format: Multiple Choice Questions (MCQ)
  • - Duration: 10 minutes
  • - Number of Questions: 10

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Test: Introduction & Causes of Inflation - Question 1
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What is inflation often defined in terms of?

Detailed Solution: Question 1

Inflation is often defined in terms of its supposed causes. One such cause is when the money supply exceeds the available goods and services in the economy. This excessive money supply can lead to a rise in the general level of prices.

Test: Introduction & Causes of Inflation - Question 2
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What does a sustained upward trend in the general level of prices constitute?

Detailed Solution: Question 2

A sustained upward trend in the general level of prices constitutes inflation. It means that over time, prices of goods and services are consistently rising, leading to a decrease in the purchasing power of money.

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Test: Introduction & Causes of Inflation - Question 3
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What is the opposite of inflation?

Detailed Solution: Question 3

The opposite of inflation is deflation. Deflation is a state of falling prices, where the value of money increases, resulting in an increase in the purchasing power of money.

Test: Introduction & Causes of Inflation - Question 4
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How is inflation defined according to G. Ackley?

Detailed Solution: Question 4

G. Ackley defines inflation as 'a persistent and appreciable rise in the general level or average of prices'. This means that inflation is characterized by an overall increase in the prices of goods and services, rather than just a few specific items.

Test: Introduction & Causes of Inflation - Question 5
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What is the key factor that causes demand-pull inflation?

Detailed Solution: Question 5

Demand-pull inflation is caused by an increase in aggregate demand exceeding the available output. This increase in aggregate demand can come from factors like increased consumer spending, investment, government expenditure, or net exports.

Test: Introduction & Causes of Inflation - Question 6
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What is cost-push inflation primarily caused by?

Detailed Solution: Question 6

Cost-push inflation is primarily caused by an increase in the cost of production. This could result from factors like higher prices of raw materials, increased wages, or other production-related expenses.

Test: Introduction & Causes of Inflation - Question 7
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Which type of inflation is associated with too much money chasing too few goods?

Detailed Solution: Question 7

Demand-pull inflation is associated with "too much money chasing too few goods." It occurs when aggregate demand exceeds the available output, leading to an upward pressure on prices.

Test: Introduction & Causes of Inflation - Question 8
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What is the main difference between creeping inflation and galloping inflation?

Detailed Solution: Question 8

The main difference between creeping inflation and galloping inflation is the intensity of the price rise. Creeping inflation is characterized by a slow and small rise in prices, often within the range of 2% to 3%, while galloping inflation involves a rapid and extreme rise, often in double or triple digits.

Test: Introduction & Causes of Inflation - Question 9
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Which type of inflation can be caused by a rise in the prices of raw materials and wages?

Detailed Solution: Question 9

Cost-push inflation can be caused by factors like a rise in the prices of raw materials or an increase in wages. These factors lead to an increase in the cost of production, which is then passed on to consumers in the form of higher prices.

Test: Introduction & Causes of Inflation - Question 10
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What is the primary factor that causes galloping inflation?

Detailed Solution: Question 10

Galloping inflation, which involves an extreme rise in prices, is primarily caused by excessive money supply in the economy. When the supply of money exceeds the available goods and services, it can lead to rapid and excessive price increases.

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About this B Com Practice Test

This test contains 10 MCQs on Introduction & Causes of Inflation with detailed solutions for each question. It is part of the Macro Economics course on EduRev, designed to align with the current B Com syllabus. Each solution explains not just the correct answer but also gives you an understanding of the topic — not just to attempt the question but also help you prepare for the exam with practice.

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