demand & supply, profit loss, inflation & price index section 1 MCQ Questions & Answers Detailed Explanation

Answer: (c)

Answer: (d)

The demand for a commodity at a given price is the quantity that will be purchased at a unit of time and at a unit price.

Demand has the following features; Demand refers to the quantity at a given price, Demand must be defined per unit time.

Answer: (d)

Inflation is a persistent increase in the general price level of goods and services in an economy over a period of time.

When the general price level rises, each unit of currency buys fewer goods and services.

Consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value.

High inflation means the excessive supply of money and thus leads to a rise in the cost of credit and interest rates.

Higher inflation leads to a reduction in economic growth, a decrease in the cost of credit, increase in spending rather than saving as the value of money is declining.

Answer: (c)

An increase in purchase by the federal Gov. causes the aggregate demand curve to shift to the right.

Answer: (c)

Reflation is the act of stimulating the economy by increasing the money supply or by reducing taxes, seeking to bring the economy (specifically price level) back up to the long-term trend, following a dip in the business cycle.

Disinflation: Reduction in the rate of inflation.

Inflation Hedge: It is an investment with intrinsic value such as Oil, Natural Gas, Gold, farmland and to a lesser degree commercial real state.

Answer: (a)

When different consumers pay different prices for the same product, this situation is known as price discrimination.