Factors Affecting Cost of Production Quiz

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If the nominal GDP growth rate is 5% and the inflation rate is 3%, what is the real GDP growth rate?

It cannot be determined from the given information.

8%

2% (correct)

15%

Which of the following is true about the Consumer Price Index (CPI) and the Retail Price Index (RPI)?

RPI includes council tax and other housing costs, while CPI does not. (correct)

RPI is always higher than CPI due to its broader coverage.

CPI and RPI measure the same set of goods and services.

CPI includes mortgage interest payments, while RPI does not.

If the nominal wage growth rate is 4% and the inflation rate is 2%, what is the real wage growth rate?

It cannot be determined from the given information.

2% (correct)

6%

-2%

Which of the following is a potential cause of demand-pull inflation?

An increase in government spending or a decrease in taxes, leading to higher consumer spending. Signup and view all the answers

If the inflation rate is 3% and the nominal interest rate on a savings account is 5%, what is the real interest rate?

2% Signup and view all the answers

Which of the following is a potential effect of inflation on the economy?

A decrease in the real value of debt and savings. Signup and view all the answers

What effect could an increase in oil prices have on raw materials?

Increase the costs of production Signup and view all the answers

How could expectations of inflation influence wages?

Lead to workers demanding higher wages Signup and view all the answers

What impact does an increase in indirect taxes have on the cost of goods?

Increase the cost of goods Signup and view all the answers

How does a depreciation in the exchange rate affect the price of raw materials?

Increase the price of raw materials Signup and view all the answers

What impact can high inflation have on firms' global price competitiveness?

Make firms less price competitive on a global scale Signup and view all the answers

How does low interest rates affect borrowing and investing for firms?

Make borrowing and investing more attractive than saving profits Signup and view all the answers

Which of the following is true about the Consumer Prices Index (CPI) in the UK?

It measures the cost of a fixed basket of goods and services purchased by households. Signup and view all the answers

If the CPI rose from 100 to 105 over a year, what would be the approximate rate of inflation?

5% Signup and view all the answers

Which of the following is a potential cause of demand-pull inflation?

A rise in household incomes and consumer spending Signup and view all the answers

If the nominal value of a good increases by 5% and the rate of inflation is 3%, what is the approximate change in the real value of the good?

An increase of 2% Signup and view all the answers

Which of the following is a potential effect of sustained high inflation?

A reduction in the incentive for firms to invest in new capital and technology Signup and view all the answers

The Retail Prices Index (RPI) differs from the Consumer Prices Index (CPI) in that it includes:

The cost of housing services such as mortgage interest payments and council tax Signup and view all the answers

Factors Affecting Cost of Production Quiz

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Questions and Answers

If the nominal GDP growth rate is 5% and the inflation rate is 3%, what is the real GDP growth rate?

Which of the following is true about the Consumer Price Index (CPI) and the Retail Price Index (RPI)?

If the nominal wage growth rate is 4% and the inflation rate is 2%, what is the real wage growth rate?

Which of the following is a potential cause of demand-pull inflation?

If the inflation rate is 3% and the nominal interest rate on a savings account is 5%, what is the real interest rate?

Which of the following is a potential effect of inflation on the economy?

What effect could an increase in oil prices have on raw materials?

How could expectations of inflation influence wages?

What impact does an increase in indirect taxes have on the cost of goods?

How does a depreciation in the exchange rate affect the price of raw materials?

What impact can high inflation have on firms' global price competitiveness?

How does low interest rates affect borrowing and investing for firms?

Which of the following is true about the Consumer Prices Index (CPI) in the UK?

If the CPI rose from 100 to 105 over a year, what would be the approximate rate of inflation?

Which of the following is a potential cause of demand-pull inflation?

If the nominal value of a good increases by 5% and the rate of inflation is 3%, what is the approximate change in the real value of the good?

Which of the following is a potential effect of sustained high inflation?

The Retail Prices Index (RPI) differs from the Consumer Prices Index (CPI) in that it includes:

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