Economics 9708 · AS & A Level · Price stability and inflation

Price stability and inflation — practice question

(a)[1]

In which year did retail sales in the US stop rising?

(b)[3]

Compare the trend in sales between the US and the Euro area from 1999 to 2001.

(c)[4]

Draw a budget line diagram and explain how it might be used to demonstrate

  • reducing the price of a product [2]
  • a reduction in income. [2]
(d)[4]

Briefly explain the equi-marginal principle of utility and consider whether it still holds if consumers use cash more often and credit cards less often.

(e)[8]

Unemployment is often claimed to be a disadvantage for all businesses. Assess whether the article gives evidence to support this view.

Worked solution & mark scheme

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