Economics 2281 · O Level · Inflation and deflation
Inflation and deflation — practice question
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.
(a)[2]
Define what is meant by commercial bank.
(b)[4]
Explain how a stock exchange could promote economic growth.
(c)[6]
Analyse the factors that may lead to deflation.
(d)[8]
Discuss whether government policy measures aimed at cutting unemployment will lead to inflation.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “A kind of financial institution” …