Control of Inflation/Deflation - SS2 Economics Past Questions and Answers - page 1
1
What tool can central banks use to control inflation?
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A
Expansionary monetary policy
B
Expansionary fiscal policy
C
Quantitative easing
2
What can governments do to control deflation?
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A
Increase taxes
B
Decrease government spending
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C
Increase government spending or decrease taxes
3
How does increasing the exchange rate affect inflation?
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A
It decreases demand for exports and increases inflation
B
It decreases demand for imports and decreases inflation
C
It increases demand for exports and decreases inflation
4
What is quantitative easing?
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A
An increase in taxes to control inflation
B
A decrease in government spending to control deflation
C
A tool used by central banks to increase the money supply and stimulate demand
5
What is the main goal of controlling inflation and deflation?
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6
Name one tool that governments can use to control inflation.
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