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.Management Sciences
Category: Inflation & Productivity
Which of the following would probably cause the CPI to rise more than the GDP deflator in the Pakistan ?
A. An increase in the price of BMWs produced in Germany and sold in the Pakistan
B. An increase in the price of Peugeots produced in the Pakistan
C. An increase in the price of helicopters purchased by the Pak Navy.
D. An increased in the Price of domestically produced armoured vehicles sold exclusively to Iran
An increase in costs will ?
A. Shift aggregate demand
B. Shift aggregate supply
C. Reduce the natural rate of unemployment
D. Increase the productivity of employees
Under Which of the following conditions would you prefer to be the borrower ?
A. The nominal rate of interest is 12 percent and the inflation rate is 9 percent
B. The nominal rate of interest is 20 percent and the inflation rate is 25 percent
C. The nominal rate of interest is 5 percent and the inflation rate is 1 percent
D. The nominal rate of interest is 15 percent and the inflation rate is 14 percent
Refer to Figure 24-1 What is the value of the basket in the base year ?
A. Rs459.25
B. Rs418.75
C. Rs300
D. None of these
If the nominal interest rate is 7 percent and the inflation rate is 3 percent, then the real interest rate is ?
A. 4 percent
B. 10 percent
C. -4 percent
D. 3 percent
E. 21 percent
The “basket” on which the CPI is based is composed of ?
A. consumer production
B. Products purchased by the typical consumer
C. raw materials purchased by firms
D. total current production
E. none of these answers
The effect of inflation on the price competitiveness of a country’s products may be offset by ?
A. An appreciation of the currency
B. A revaluation of the currency
C. A depreciation of the currency
D. Lower inflation abroad
Suppose your income rises from Rs19,000 to Rs31,000 while the CPI rises from 122 to 169 Your standard of living has likely ?
A. fallen
B. You can’t tell without knowing the base year
C. risen
D. stayed the same
In 1989, the CPI was 124.0 in 1990, it was 130.7 What was the rate of inflation over this period ?
A. 5.4 percent
B. 30.7 percent
C. You can’t tell without knowing the base year
D. 5.1 percent
If inflation is 8 percent and the real interest rate is 3 percent, then the nominal interest rate must be ?
A. 3/8 percent
B. 5 percent
C. 11 percent
D. 24 percent
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