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Quiz - Worksheets - Costs - Inflation - Monetary Policy - Economics bank - Virtual Bank of Biz/ed

Monetary Policy - Inflation - Costs

Quiz - Inflation - who suffers?

1. Which of the following would be considered as 'menu costs' of inflation?
(Select one or more answers)

(a) * a shop having to re-price all the goods on the shelf
(b) * getting less interest on savings
(c) * a firm having to print new price lists
(d) * a firm becoming less competitive than overseas firms
(e) * having to pay cash in at the bank more frequently

   
2. Which of the following would be considered as 'shoe-leather costs' of inflation?
(Select one or more answers)

(a) * spending more time researching to find the best rate of return for money
(b) * finding your savings going down in value
(c) * having to make more trips to the bank to check money is keeping its value
(d) * having to pay more money on mortgages because the rate of interest has gone up to combat inflation

   
3. Out of the following groups of people, which one is likely to suffer the most from inflation?
(Select one answer)

(a) * savers finding the value of their savings reduced by inflation
(b) * public sector workers
(c) * pensioners living off fixed incomes
(d) * private sector workers

   
4. Out of the following groups of people, which one is most likely to benefit the most from inflation?
(Select one answer)

(a) * people who have large 25 year mortgages on their properties
(b) * savers, so long as the rate of interest exceeds inflation
(c) * pensioners with index-linked pensions

   
5. In a time of high, volatile and increasing inflation, would you expect the following variables to increase or decrease in value?

  • Investment by firms
    (Select one answer)

(a) * Increase
(b) * Decrease

   
  • Savings
    (Select one answer)

(a) * Increase
(b) * Decrease

   
  • Economic growth
    (Select one answer)

(a) * Increase
(b) * Decrease

   
  • Interest rates
    (Select one answer)

(a) * Increase
(b) * Decrease