(a)[2]
Identify two fiscal policy tools.
(b)[4]
Explain two factors influencing productivity.
(c)[6]
Analyse reasons why central banks matter to an economy.
(d)[8]
Discuss whether deflation is harmful to an economy.
Economics 0455 · IGCSE · Inflation and deflation
Inflation and deflation — practice question
Japan has experienced extended periods of deflation in recent decades. Even though fiscal policy and monetary policy have been used to boost the economy, economic growth is still weak. Some economists also argue that the central bank’s monetary policy is one cause of Japan’s low productivity.