(a)[2]
Explain how inflation can make the ‘real value’ of money fall to half its original level.
(b)[4]
With the aid of a diagram, explain why ‘rapid price rises encourage panic-buying by consumers, creating shortages that further increase inflation’.
(c)[2]
With reference to one function of money explain why hyperinflation in Zimbabwe led the country to abandon its currency in 2008.
(d)[6]
Using aggregate demand and aggregate supply analysis, discuss whether monetary policy can be used to secure both a high level of investment and a low rate of inflation.
(e)[6]
Discuss whether everyone in an economy such as Venezuela would be worse off as a result of hyperinflation.