1. Directions

You will read passages on the topic and then answer questions about them. You may find vocabulary at the end of the test. Read the questions carefully before choosing the correct answers.

2. Questions of the test

Question 1. What is inflation?
A) A measure of how much prices for goods and services have increased over a specific period of time
B) A measure of how much the money supply has increased over a specific period of time
C) A measure of how much the cost of production has increased over a specific period of time
D) A measure of how much demand for goods and services has increased over a specific period of time

Question 2. Which of the following is NOT a type of inflation?
A) Demand-pull inflation
B) Cost-push inflation
C) Hyperinflation
D) Supply-push inflation

Question 3. Which of the following is NOT a tool that governments and central banks can use to try to manage inflation?
A) Adjusting interest rates
B) Increasing taxes
C) Implementing price controls
D) Increasing government spending

Question 4. Which of the following statements is NOT true about inflation?
A) Inflation can lead to a decrease in the purchasing power of money
B) Inflation can stimulate economic growth
C) Inflation can reduce the burden of debt
D) Inflation can lead to increased economic stability

Question 5. Which of the following is NOT a factor that can contribute to inflation?
A) Increase in the cost of raw materials and production
B) Decrease in demand for goods and services
C) Increase in the money supply
D) Decrease in the cost of production