demand & supply, profit loss, inflation & price index section 3 MCQ Questions & Answers Detailed Explanation

Answer: (d)

Hyperinflation occurs when a country experiences very high and usually accelerating rates of monetary and price inflation, causing the population to minimize their holdings of money.

Under such conditions, the general price level within an economy increases rapidly as the official currency quickly loses real value.

Stagflation: Persistent high inflation combined with high unemployment.

Conflation: The merging of two or more sets of information texts, ideas etc into one.

Stealth inflation: It is a type of charge or fee created by the business to gain extra profit and revenue from its customers.

Answer: (c)

Answer: (a)

The Laffer Curve says that, if marginal tax rates fall, tax revenues will rise, and the budget deficit will decrease.

Supply-side economics is a macroeconomic theory that gives economic growth can be most effectively created by investing in capital and by lowering barriers to the production of goods and services.

Answer: (c)

With the increase in GDP, aggregate demand increases, because more production means people have more disposable income, which means more consumer spending.

As a result, prices rise in response, and in conclusion, because aggregate demand grows faster than long-term aggregate supply, economic growth will be coupled with inflation.

Hyperinflation - In economics, hyperinflation occurs when a country experiences very high and usually actuarially rates of inflation. Economic growth is usually coupled with inflation.

Answer: (b)

The way total output changes due to change in all inputs in the same proportion is known as “law of return to scale”.

Answer: (a)