26. When the rate of inflation exceeds the rate of increase in wages, it leads to a decrease in:
a) Consumer spending
b) Unemployment
c) Productivity
d) Standard of living
27. Which of the following is a measure taken to combat inflation?
a) Increasing government spending
b) Decreasing interest rates
c) Increasing taxes
d) Increasing money supply
28. Which of the following is a consequence of deflation?
a) Increased purchasing power
b) Increased borrowing costs
c) Increased investment
d) Increased economic growth
29. Which of the following is an example of an inflationary gap?
a) Actual GDP exceeds potential GDP
b) Actual GDP is less than potential GDP
c) Unemployment rate is low
d) Unemployment rate is high
30. Inflation expectations can affect actual inflation through their impact on:
a) Government spending
b) Consumer savings
c) Wage negotiations
d) Foreign exchange rates
