Inflation and deflation

What does the construction of a retail price index involve?

Feb/March 2016

The table gives the percentage changes in earnings and consumer prices in four countries over a one-year period. Which country is most likely to have seen the largest rise in real income during the year?

Feb/March 2016

Within the US Consumer Price Index (CPI), food carries a weighting of $13.7\%$. In India, food is given a weighting of $46.2\%$ in the CPI. What conclusion can be drawn from this?

Feb/March 2016

A government finance minister stated that the purchasing power of most people’s incomes had gone up over the previous year. What would have had to increase for purchasing power to rise?

Feb/March 2016

The table presents the Consumer Price Index (CPI) for an economy across five years. During which pair of years was inflation highest?

Feb/March 2017

Over one year, the inflation rate in a country stood at 3%. In that same year, the salaries of company managers increased by 6% and the wages of office workers increased by 2%. What was the effect on real income (purchasing power)?

Feb/March 2017

The economy is going through a phase of deflation. What does this indicate for the economy?

Feb/March 2018

An economy went through deflation. Which combination indicates the most likely result of this?

Feb/March 2019

A person earns annual interest of $4\%$ on their savings. Inflation is $5\%$ each year. By approximately how much does the real value of their savings change?

Feb/March 2020

An increase in which of the following is least likely to lead to inflation?

Feb/March 2020

The table presents the Consumer Prices Index (CPI) for an economy. What conclusion can be drawn from the data?

Feb/March 2021

Deflation means a persistent decrease in the overall price level. What could lead to deflation?

Feb/March 2021

What is involved in constructing the Consumer Prices Index (CPI)?

Feb/March 2021

What does deflation mean?

Feb/March 2023

A government aims to keep inflation within the range of $2\%$ to $3\%$. The diagram illustrates the inflation rate across a four-year period. What can be deduced from the diagram?

Feb/March 2023

The table gives the weights assigned to four items in a country's Consumer Prices Index for year 1 and year 2. Which conclusion can be drawn?

Feb/March 2024

The table gives the weights assigned to different categories of goods in a Consumer Prices Index (CPI) for two years. What conclusion can be drawn from the table when year 1 is compared with year 2?

Feb/March 2025

A worker receives $250 per week, and this gives a disposable income of $175. What factor will affect the real value of the worker’s $250 earned income?

May/June 2015

What is most likely to bring about a decrease in the rate of inflation?

May/June 2015

Which person is most likely to gain during an inflationary period?

May/June 2015

In an economy, when would a rise in aggregate demand be least likely to lead to inflation?

May/June 2015

Who becomes worse off during a period of deflation?

May/June 2016

The weighting for a product within the consumer price index was raised. What is the most likely explanation for this change?

May/June 2016

What is most likely to cause an increase in the rate of inflation?

May/June 2016

In a developing country, real incomes have increased. Which situation would definitely have led to this?

May/June 2017

What does the term deflation mean?

May/June 2017

The table contains some data from a developing country. Consumer prices: percentage change compared with the previous year 2011: 4% 2012: 5% 2013: 3% 2014: 2% Which statement has to be correct?

May/June 2017

Although the Central Bank of Nigeria had imposed a 9% ceiling for inflation, Nigeria’s inflation rate rose to 9.2% in August 2015. The Governor of the Central Bank said that he would support the use of fiscal policy to bring the inflation rate down and would oppose pressure to devalue the country’s exchange rate.

May/June 2017

What is taken into account when calculating a consumer prices index (CPI)?

May/June 2018

What is used to determine the weights in the consumer prices index (CPI)?

May/June 2018

A basket of goods is used to work out a country’s rate of inflation. What items are included in the basket of goods?

May/June 2018

In February 2016, share prices on stock exchanges declined across the world. This occurred for several reasons, including worries about a slowdown in world growth, the risk of deflation and unemployment, and fears that some commercial banks might fail.

May/June 2018

In Uganda, the inflation rate decreased from $5\%$ in 2014 to $2\%$ in 2015. What conclusion may be drawn from this information?

May/June 2019

A country is currently at full employment. Which factor is most likely to cause demand-pull inflation to rise?

May/June 2019

The table sets out the percentage change from 2015-2016 in gross domestic product (GDP) and consumer prices for selected countries. Which country was experiencing economic recession and inflation?

May/June 2019

What is the most likely factor to lead to an increase in the inflation rate in an economy?

May/June 2019

During January 2016, a country’s inflation rate fell from $3\%$ to $2\%$. In March 2016, the inflation rate was $4\%$. What change took place in the price level in January and March?

May/June 2019

The diagram illustrates percentage (%) changes in prices and wages across time. What information does the diagram show?

May/June 2019

What could make prices increase as a result of cost-push inflation?

May/June 2019

A country’s inflation rate, as measured using the Consumer Prices Index (CPI), stood at $3\%$ in year 1. Three years later, it had fallen to $0.8\%$. What conclusion can be drawn from this information?

May/June 2021

Which outcome is deflation most likely to cause?

May/June 2021

Within one year, a company experienced two changes. The salaries of the company directors rose by $15\%$. The wages of office workers rose by $5\%$. The inflation rate was $3.4\%$. What happened to real income?

May/June 2021

The table gives the changes in the Consumer Prices Index (CPI) from the base year, 1, and over the following three years. Which statement is correct?

May/June 2021

What is likely to occur when a country is experiencing deflation?

May/June 2021

Over the course of a year, two changes took place in a company. The salaries of the company directors rose by 15%. The wages of office workers rose by 5%. The inflation rate was 3.4%. What happened to real income?

May/June 2021

The table presents the Consumer Prices Index (CPI) for a country over five years. Which statement about the country is correct?

May/June 2021

What can lead to deflation?

May/June 2021

During a one-year period, two adjustments were made in a company. The salaries of company directors rose by $15\%$. The wages of office workers increased by $5\%$. The inflation rate was $3.4\%$. What happened to real income?

May/June 2021

Which combination is required to build a consumer prices index?

May/June 2022

In one country, inflation is $10\%$ while nominal interest rates stand at $7\%$. Which group would be most likely to gain from this situation?

May/June 2022

Which citizens are most likely to gain during a time of rapid inflation?

May/June 2023

Which groups of people are most likely to benefit during a period of inflation?

May/June 2023

An economy is seeing a prolonged decrease in the overall price level. Which term is used to describe this?

May/June 2023

What is most likely to rise when the inflation rate gradually moves from $2\%$ to $8\%$ over one year?

May/June 2024

A government wants to prevent deflation. Which policy combination would be the most effective in helping to achieve this aim?

May/June 2024

Which item would be the least likely to appear in the Consumer Prices Index (CPI)?

May/June 2024

In a country, the Consumer Prices Index (CPI) increased over one year from $125$ to $150$. What was the country's rate of inflation?

May/June 2024

A Consumer Prices Index (CPI) is made up of four items. The table gives the percentage change in price for each item over one year, together with the weight assigned to each item. Which price change would have the greatest effect on the CPI level?

May/June 2025

An economy operating at full employment is predicted to experience a rise in aggregate demand. What is most likely to rise?

May/June 2025

Which alterations are most likely to produce the greatest increase in inflation in country X?

May/June 2025

What is likely to bring about deflation?

May/June 2025

What is not part of the process used to construct a retail price index?

Oct/Nov 2015

The table gives the percentage change in earnings and consumer prices for four countries over a one-year period. Which country will have had an unchanged level of real income during that year?

Oct/Nov 2015

In $2009$, a country recorded an inflation rate of $2\%$. The table gives the inflation rates for the next years: $2010: 2\%$, $2011: 1\%$, $2012: 0\%$, $2013: -1\%$. In which year did deflation begin?

Oct/Nov 2015

A consumer price index (CPI) is made up of four items. The table gives the percentage change in price for each item over one year and the weight assigned to each item. Which price change would have the greatest effect on the CPI level?

Oct/Nov 2015

During 2008, a country’s inflation rate was $4\%$. The table lists the inflation rate for the years that followed. 2009: $4\%$ 2010: $2\%$ 2011: $-2\%$ 2012: $-1\%$ In which year did deflation begin?

Oct/Nov 2015

What does the construction of a Retail Price Index involve?

Oct/Nov 2016

Certain goods represent a larger share of the average household’s total expenditure than others. How is this reflected when a Retail Price Index is built?

Oct/Nov 2016

In 2014, Ghana’s currency, the cedi, altered in value by 40% against the US dollar. As the cedi depreciated, inflation increased. The economy’s demand conditions were shifting, while government spending rose faster than taxation. A number of economists warned that higher taxes could lead to deflation.

Oct/Nov 2016

Household debt in South Korea in 2014 was rising to record highs. People were borrowing more and saving less: the savings ratio fell from 19% in 1985 to 4% in 2014. Even with such low saving, there was little demand-pull or cost-push inflation. In fact, in 2014 the country came close to deflation.

Oct/Nov 2016

What could lead to cost-push inflationary pressure in an industry that supplies mobile (cell) phones?

Oct/Nov 2017

The table presents the Consumer Prices Index (CPI) for a selection of cities in August 2015, using New York, USA as the base of 100. What conclusions can be drawn from the table?

Oct/Nov 2017

In 2008, Zimbabwe hit a peak inflation rate of 500 trillion per cent. By 2015, inflation had dropped so far that deflation was being discussed. Such deflation could be very serious because unemployment in the country was high. Raising government spending on training is one policy option that may be used to bring down both unemployment and inflation.

Oct/Nov 2017

For a period of time, many central banks have aimed for an inflation target of around 2%. A modest, steady increase in the general price level can create several advantages for an economy. For central banks and governments, the earlier challenge was to keep the inflation rate from moving above the target while also maintaining a low unemployment rate. The challenge has now shifted, with the danger being that inflation may drop below this target. By the end of 2014, China’s consumer prices index was 100.5. The inflation rate in the country during 2015 was 2%. In contrast, several European countries experienced deflation. This produced a number of effects, including a wider pay gap between skilled and unskilled workers. A key cause of the downward pressure on inflation was the fall in the world price of oil from US$120 to US$66 per barrel in 2015. This lowered energy and transport costs. Reduced transport costs had a clear effect on food prices. Fig. 1 shows the way the food market was influenced in 2015. Fig. 1 The market for food in 2015. The vertical axis is labelled 'price of food' and the horizontal axis is labelled 'quantity of food'. The origin is labelled O. The price levels are labelled $P_1$ and $P_2$. The quantities are labelled $Q_1$ and $Q_2$. There is a downward sloping demand curve labelled D. There are two upward sloping supply curves labelled $S_1$ and $S_2$. While inflation was falling, unemployment declined in some countries. However, other countries saw inflation fall alongside a rise in unemployment. For instance, unemployment in France increased between 2014 and 2015. This created upward pressure on French Government spending.

Oct/Nov 2017

Which measure is used to track inflation?

Oct/Nov 2018

The four groups affected by shifts in economic conditions are creditors, debtors, exporters and importers. Which two are most likely to suffer from a high inflation rate?

Oct/Nov 2018

Which country is experiencing the most severe deflation?

Oct/Nov 2018

High-technology (hi-tech) firms rely on a mix of resources, including labour and land. A hi-tech firm in the US has developed a new price index that it says gives a more accurate reading than the Consumer Prices Index (CPI). Central banks seek the most accurate inflation measure because inflation affects many groups, such as savers and borrowers, as well as a country’s level of investment.

Oct/Nov 2018

Rates of inflation and deflation are tracked with a consumer prices index (CPI) across a span of time. The table gives the average CPI rates for Japan from 2010-2014. During which period did Japan go through deflation and then inflation?

Oct/Nov 2019

Venezuela, which is one of the world’s major oil producers, has in recent years suffered hyperinflation of over 400% per annum. How does hyperinflation influence an economy?

Oct/Nov 2019

The graph illustrates the inflation rate in a country from 2000 to 2014. What conclusion can be drawn about average prices?

Oct/Nov 2019

Some goods make up a larger proportion of an average household’s total expenditure than others. How is this reflected when a consumer prices index is constructed?

Oct/Nov 2020

Some goods account for a larger proportion of a typical household’s total spending than others. How is this taken into account when a consumer prices index is constructed?

Oct/Nov 2020

Some items make up a larger share of the total spending of an average household than others. How is this allowed for when a consumer prices index is constructed?

Oct/Nov 2020

For what reason is weighting applied in the Consumer Prices Index (CPI)?

Oct/Nov 2021

An economy experienced deflation for a second consecutive month. What is the meaning of this?

Oct/Nov 2021

State a cause of demand-pull inflation.

Oct/Nov 2021

In what way is the rate of inflation measured?

Oct/Nov 2021

What does a rise in the Consumer Prices Index (CPI) always show?

Oct/Nov 2021

A fall in which variable is most likely to make the rate of inflation rise?

Oct/Nov 2022

The table presents the percentage changes in earnings and consumer prices for four countries over one year. Which country is most likely to have had the largest rise in real income during that year?

Oct/Nov 2022

What is the most probable cause of inflation?

Oct/Nov 2022

A trade union says that, over the last five years, its members have seen their real income fall. What must have occurred for this to be true?

Oct/Nov 2022

Why is deflation harmful to an economy?

Oct/Nov 2022

The table presents the percentage changes in earnings and consumer prices for four countries over one year. Which country is most likely to have had the largest rise in real income during that year?

Oct/Nov 2022

Which group is most likely to gain during a period of rapid inflation?

Oct/Nov 2023

What must have taken place in a country if it recorded an annual inflation rate of $100\%$?

Oct/Nov 2023

Which person is most likely to gain during a time of inflation?

Oct/Nov 2023

The central bank of Mexico adjusts its interest rate in an effort to limit the increase in the general price level to only $3\%$. Which government aim was it directly trying to achieve?

Oct/Nov 2024

The table presents the percentage changes in earnings and consumer prices for four countries over a single year. Which country has had the largest rise in real income over the year?

Oct/Nov 2024