Economics 9708 · AS & A Level · Balance of payments
Explain the difference between cost‑push and demand‑pull inflation and judge which is more likely to occur if the exchange rate of a country with few natural resources depreciates.
Assess whether monetary policy is the sole way to control a high rate of inflation.
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “AO1 Knowledge and Understanding (max 3 marks): Cost-push inflation is inflation that results from higher production costs (1). Demand-pull inflation comes from rises in AD that are not matched by equivalent rises in AS (1). A clear explanation of how the two differ (1).” …