Inflation – Multiple Choice Questions (MCQs)

1. 25. What is 'creeping inflation'?

   • A. A very high rate of inflation
   • B. A moderate rate of inflation
   • C. A slow and mild rate of inflation
   • D. A sudden surge in prices

2. 26. What is 'walking or trotting inflation'?

   • A. A very rapid increase in prices
   • B. A slow and mild increase in prices
   • C. A moderate increase in prices (a single or low double digit)
   • D. A decrease in prices

3. 27. What is 'galloping or running inflation'?

   • A. A slow and mild increase in prices
   • B. A moderate increase in prices
   • C. A very rapid increase in prices (double or triple digit rates)
   • D. A decrease in prices

4. 28. What is the impact of lower interest rates on inflation?

   • A. It tends to decrease inflation
   • B. It tends to increase inflation by encouraging borrowing and spending
   • C. It has no significant impact
   • D. The impact depends on the fiscal deficit

5. 29. What is the impact of higher interest rates on inflation?

   • A. It tends to increase inflation
   • B. It tends to decrease inflation by making borrowing more expensive
   • C. It has no significant impact
   • D. The impact depends on the money supply