| Very Important MCQs on ” Inflation and Price Index “. These questions are essential for SSC, Railways, Defence, CTET, State PCS, UPSC, Judiciary and all other examinations of India. |
MCQ on Inflation and Price Index
Q. In India, inflation is measured by the ______
(A) Wholesale Price Index number
(B) Consumers Price Index
(C) Producer Price Index
(D) National Income deflation
Q. For measuring the changes in the price level of the country, which among the following index number is used?
(A) Consumer price index number
(B) Production index number
(C) Security price index number
(D) Wholesale price index number
Q. Economic growth is usually coupled with ______
(A) Deflation
(B) Inflation
(C) Stagflation
(D) Hyper-inflation
Q. Inflation rate based on consumer price index increases if______
(A) Bank rate is decreased
(B) Reverse repo rate is decreased
(C) Statutory Liquidity ration is increased
(D) Repo rate is increased
Q. Which is incorrect about inflation?
(A) Inflation indicated the rise in the price of basket of commodities on a point-to point basis
(B) The inflation rate in India is calculated on the basis of the wholesale price index
(C) For some commodities retail prices are also considered for measurement of inflation
(D) Inflation rate going down does not mean prices are declining
Q. Inflation is best described as______
(A) high prices
(B) increase in price index
(C) increase in purchasing power
(D) increase in price of particular goods
Q. Who amongst the following benefits most from inflation?
(A) Creditors
(B) Debtors
(C) Saving Bank Account Holders
(D) Government Pensioners
Q. Consider the following statements.
- Inflation benefits the debtors.
- Inflation benefits the bond holders.
Which of the statement(s) given above is/are correct?
(A) Only 1
(B) Only 2
(C) Both 1 and 2
(D) Neither 1 nor 2
Q. Which one of the following is NOT a method to control inflation?
(A) Controlling the demand
(B) Controlling the supply of money
(C) Reducing the rate of interest
(D) Rationing of commodities
Q. Which of the following price index number are used for calculation of Central Government employee wage compensation?
(A) Wholesale price index
(B) Consumer price index for industrial workers
(C) Consumer price index for agricultural labourers
(D) None of the above
Q. With reference to India, consider the following statements.
- The Wholesale Price Index (WPI) in India is available on a monthly basis only.
- As compared on Consumers Price Index for Industrial
- Workers [CPI(IW)] the WPI gives less weight to food articles.
Which of the following statement(s) given above is/are correct?
(A) Only 1
(B) Only 2
(C) Both 1 and 2
(D) Neither 1 nor 2
Q. Consider the following statements and state which is/are correct?
- The sub-prime crisis which hit the U.S. economy was caused by sudden increase in oil prices.
- The crisis led to default in home loan repayment.
- It led to failure of some U.S. Banks.
- Sub-prime crisis caused crash in Indian stock market.
Choose your answer from the given codes.
(A) Only 1
(B) Only 2 and 4
(C) Only 2, 3 and 4
(D) 1, 2, 3 and 4
Q. The most common measure of estimating inflation in India is_______
(A) Price Index
(B) Wholesale Price Index
(C) Consumer Price Index
(D) Price Index of Index Goods
Q. Which one of the following statements is an appropriate description of deflation?
(A) It is a sudden fall in the value of a currency against other currencies
(B) It is persistent recession in both the financial and real sectors of economy
(C) It is a persistent fall in the general price level of goods and services
(D) It is a fall in the rate of inflation over a period of time
Q. Assertion (A): The rate of inflation in India has come down in the last three years.
Reason (R): The country has received a large amount of foreign capital during these years.
Select the correct answer from the codes given below.
Code
(A) Both (A) and (R) are true and (R) is the correct explanation of (A)
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A)
(C) (A) is true, but (R) is false
(D) (A) is false, but (R) is true
Q. An expression coined by economists to describe an economy that is growing at such a slow pace that more jobs are being lost than are being added ______
(A) Stagflation
(B) Recession
(C) Growth Recession
(D) Ratchet Inflation
Q. A rapid increase in the rate of inflation is sometimes attributed to the ‘base effect’. What ‘base effect’?
(A) It is the impact of drastic deficiency in supply due to failure of crops
(B) It is the impact of the surge in demand due to rapid economic growth
(C) It is the impact of the price levels of previous year on the calculation of inflation rate
(D) None of the statements (A), (B) and (C) given above is correct in this content
Q. In India, in the overall Index of Industrial Production, the indices of eight core industries have a combined weight of 37-90%. Which of the following are among those eight core industries?
- Cement
- Fertilisers
- Natural gas
- Refinery products
- Textiles
Select the correct answer using the codes given below.
(A) Only 1 and 5
(B) Only 2, 3 and 4
(C) Only 1, 2, 3 and 4
(D) 1, 2, 3, 4 and 5
Q. Index ‘Residex’ is associated with_______.
(A) Share Prices
(B) Mutual Fund Prices
(C) Price Index
(D) Land Prices
Q. RESIDEX, an index of residential prices in India, was launched in the year ________.
(A) 2001
(B) 2004
(C) 2007
(D) 2008
Q. In calculation of index of wholesale prices, which one of the following sector is assigned maximum weightage?
(A) Food articles
(B) Non-food articles
(C) Fuel, power, light and lubricant
(D) Manufactured products
Q. Who has been recently made the chairman of the work group on revision of Wholesale Price Index Services?
(A) C. Rangrajan
(B) P.R. Panchamukhi
(C) K.C. Pant
(D) Abhijit Sen
Q. The base year for All-India Wholesale Price Index (WPI) has been changed by the Government of India from 2004-05 to________.
(A) 2010-11
(B) 2011-12
(C) 2012-13
(D) 2013-14
Q. Which of the following fixed the four percent inflation target in India with tolerance level of +/–2 percent for the period 2016 to 2021?
(A) Reserve Bank of India
(B) Government of India
(C) NITI Aayog
(D) Fourteenth Finance Commission
Q. Producer Price Index measures________.
(A) the average change in the prices of produced goods and services
(B) the marginal change in the prices of produced goods and services
(C) the total change in the prices of produced goods and services
(D) None of the above
Q. Increase in absolute and per capita real GNP do not connote a higher level of economic development, if______.
(A) industrial output fails to keep pace with agricultural output
(B) agricultural output fails to keep pace with industrial output
(C) poverty and unemployment increase
(D) imports grow faster than exports
Q. Match List-I with List-II and select answer using the codes given below in the lists.
List-I
(a) Boom
(b) Recession
(c) Depression
(d) Recovery
List-II
- Business activities are at high level with increasing income, output and employment at macro level.
- Gradual fall of income, output and employment with business activity in a low gear.
- Unprecedented level of under employment and unemployment, drastic fall in income, output.
- Steady rise in the general level of prices, income, output and employment.
Code
| (a) | (b) | (c) | (d) | |
| (A) | 1 | 2 | 3 | 4 |
| (B) | 1 | 2 | 4 | 3 |
| (C) | 2 | 1 | 4 | 3 |
| (D) | 2 | 1 | 3 | 4 |