Inflation and deflation

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

May/June 2015

What is most likely to lead to a decrease in the inflation rate?

May/June 2015

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

May/June 2015

Under what circumstances would a rise in aggregate demand be least likely to cause inflation in an economy?

May/June 2015

Who becomes worse off in a period of deflation?

May/June 2016

The weighting assigned to a product in the consumer price index was raised. What is the most likely reason for this change?

May/June 2016

In a developing country, real incomes have gone up. Which situation would have caused this for certain?

May/June 2017

What does the term deflation mean?

May/June 2017

What does the calculation of a consumer prices index (CPI) include?

May/June 2018

What decides the weights used in the consumer prices index (CPI)?

May/June 2018

During February 2016, share prices on stock exchanges declined worldwide. This was linked to several factors, including concern over a slowdown in world growth, the risk of deflation and unemployment, and worries that certain commercial banks might fail.

May/June 2018

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

May/June 2019

A country is going through a period of full employment. What is most likely to cause demand-pull inflation to rise?

May/June 2019

The table presents the percentage variation from 2015-2016 in gross domestic product (GDP) and consumer prices for a selection of countries. Which country was experiencing economic recession and inflation?

May/June 2019

Which factor is most likely to lead to a higher inflation rate in an economy?

May/June 2019

During January 2016, a country's inflation rate fell from 3% to 2%. By March 2016, inflation had risen to 4%. What change occurred in the price level in January and in March?

May/June 2019

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

May/June 2021

What is deflation most likely to cause?

May/June 2021

Within one year, a company experienced two alterations. Company directors’ salaries went up by $15\%$. Office workers’ wages rose by $5\%$. The inflation rate was $3.4\%$. What was the effect on real income?

May/June 2021

The table presents the Consumer Prices Index (CPI) for the base year, 1, and the following three years. Which statement is correct?

May/June 2021

What is likely to occur when a country is in a period of deflation?

May/June 2021

During one year, a company experienced two changes. Company directors’ salaries went up by $15\%$. Office workers’ wages went up by $5\%$. The inflation rate was $3.4\%$. What happened to real income?

May/June 2021

What combination is required to construct a consumer prices index?

May/June 2022

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

May/June 2023

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

May/June 2023

Which factor is most likely to rise as the inflation rate increases gradually from $2\%$ to $8\%$ during one year?

May/June 2024

A government wants to stop deflation. Which policy mix would be most effective in achieving this objective?

May/June 2024

Which item is the least likely to be included in the Consumer Prices Index (CPI)?

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 a one-year period and the weighting of each item. Which price change will have the greatest effect on the level of the CPI?

May/June 2025

An economy operating at full employment is predicted to experience a rise in total demand. What is the most likely outcome to increase?

May/June 2025

Which changes are most likely to cause the largest increase in inflation in country X?

May/June 2025

In 2009, a country recorded an inflation rate of $2\%$. The table gives the inflation rate in the years that followed. 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, together with the weight assigned to each item. Which price change will have the greatest effect on the CPI level?

Oct/Nov 2015

During 2008, a country’s inflation rate was $4\%$. The table presents the inflation rate for the years that follow. In what year did deflation begin?

Oct/Nov 2015

What does the construction of a Retail Price Index involve?

Oct/Nov 2016

Some goods make up a larger proportion of an average household’s total expenditure than others. How is this allowed for when a Retail Price Index is built?

Oct/Nov 2016

In 2014, South Korea's household debt was climbing toward record highs. Households were borrowing more and setting aside less. The savings ratio dropped from 19% in 1985 to 4% in 2014. Even with such low saving, there was very little demand-pull or cost-push inflation. In fact, the country was close to deflation in 2014.

Oct/Nov 2016

What might be a cause of cost-push inflationary pressure in an industry that supplies mobile (cell) phones?

Oct/Nov 2017

For a period of time, many central banks have aimed for an inflation target of around 2%. A modest, regular increase in the general price level can generate several advantages for an economy. For central banks and governments, the earlier challenge was preventing inflation from rising above the target while still keeping unemployment low. The issue has now altered, and the danger is that inflation may drop below the target rate. By the end of 2014, China’s consumer prices index was 100.5. The country’s inflation rate in 2015 was 2%. At the same time, several European countries experienced deflation. This produced a number of effects, including a wider wage gap between skilled and unskilled workers. A key cause of the downward pressure on inflation was the global price of oil falling from US$120 to US$66 a barrel in 2015. This lowered the cost of energy and transport. Reduced transport costs also had a clear effect on food prices. Fig. 1 shows the way the food market was influenced in 2015. As inflation fell, some countries also saw unemployment fall. Other countries, however, faced both lower inflation and higher unemployment. For instance, France experienced rising unemployment between 2014 and 2015. This created upward pressure on French Government spending.

Oct/Nov 2017

Four groups affected by changes in economic conditions are creditors, debtors, exporters and importers. Which pair is most likely to be disadvantaged by a high inflation rate?

Oct/Nov 2018

Which country is experiencing the most severe deflation?

Oct/Nov 2018

High technology (hi-tech) firms make use of a variety of resources, including labour and land. One hi-tech firm in the US has developed a new price index, which it says is more precise than the Consumer Prices Index (CPI). Central banks aim to get the most precise measure of inflation because inflation has consequences for many groups, including savers and borrowers, as well as for the level of investment in a country.

Oct/Nov 2018

Venezuela, one of the world’s major oil producers, has faced hyperinflation of more than $400\%$ per annum in recent years. In what ways does hyperinflation affect an economy?

Oct/Nov 2019

The graph illustrates the rate of inflation 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 a typical household’s overall expenditure than others. How is this reflected when a consumer prices index is constructed?

Oct/Nov 2020

Some goods represent a larger proportion of a typical household’s overall spending than others. How is this allowed for when a consumer prices index is constructed?

Oct/Nov 2020

An economy experienced deflation for a second consecutive month. What does this mean?

Oct/Nov 2021

What can lead to demand-pull inflation?

Oct/Nov 2021

In what way is the inflation rate measured?

Oct/Nov 2021

What is always shown by a rise in the Consumer Prices Index (CPI)?

Oct/Nov 2021

What is most likely to lead to inflation?

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

Why might deflation be harmful to an economy?

Oct/Nov 2022

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

Oct/Nov 2022

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

Oct/Nov 2023

The table presents shifts in economic policies for four countries, A, B, C and D. Which country is most likely to be adopting a policy aimed at avoiding deflation?

Oct/Nov 2024

The table gives the weights assigned to the three items in a Consumer Prices Index (CPI) for two years. What conclusion can be drawn from this data?

Oct/Nov 2024

The graph illustrates movements in the average price level. At what time did the country experience deflation?

Oct/Nov 2025

The Consumer Prices Index (CPI) in a country decreases from 120 to 110 over one year. What is a likely consequence of this decrease?

Oct/Nov 2025