A-Level - Inflation

What must occur during a period of inflation?

• A. a fall in unemployment

• B. a fall in the price level

• C. a fall in the value of money

• D. a fall in the exchange rate

A group of workers agreed to a 2% pay cut in a year when the economy experienced a deflation of 5%.

What happened to the money value and real value of their wages?

• A

• B

• C

• D

The table shows the share of household income spent on four types of products and the percentage change in the price of those products over the period of a year.

What was the country’s inflation rate?

• A. 0.5%

• B. 4%

• C. 12%

• D. 50%

What do the weights in a consumer price index show?

• A. the proportion of their total expenditure that people spend on the different product groups

• B. the proportion of the population who purchase the different product groups

• C. the price of each product

• D. the rate at which each product group changes in price

What could cause cost-push inflation?

• A. a decrease in trade union power

• B. a depreciation of the foreign exchange rate

• C. an increase in consumer expenditure

• D. an increase in labour productivity

What can be concluded from the diagram below, which shows a country’s inflation between 2020 and 2023?

• A. increase in inflation rate

• B. decrease in inflation rate

• C. the value of money rose over the period

• D. inflation rate is negative

Inflation caused by a rise in wage rates would be classified as ....

• A. Demand pull inflation

• B. Demand push inflation

• C. Cost push inflation

• D. Cost pull inflation

Inflation caused by an increase in consumption would be classified as ....

• A. Demand pull inflation

• B. Demand push inflation

• C. Cost push inflation

• D. Cost pull inflation

What must be increasing if a country is experiencing inflation?

• A. the cost of living

• B. the purchasing power of money

• C. the real disposable income of exporters

• D. the standard of living

If CPI goes from 100 to 125 and your salary goes from $200,000 to $250,000, what happened to your purchasing power?

• A. increase

• B. decrease

• C. no change

• D. unstable