MACRO Aims: 2. Inflation

Question 1

What is INFLATION?

Answer 1

Question 2

Describe DEFLATION

Answer 2

Question 3

NOMINAL v REAL Inflation Rates

Answer 3

Question 4

Describe what is meant by the term ‘WAGE STAGNATION’.

Your response must make reference to information provided in the source material.

Answer 4

Question 5

Inflation is measured through the Consumer Price Index (CPI). Describe how the CPI is calculated

Describe the way in which the rate of inflation is calculated in the UK

Answer 5

Question 6

Explain the IMPACT of inflation on INDIVIDUAL

Explain the impacts on consumers of a FALL IN THEIR REAL INCOME.

Answer 6

Question 7

Explain the IMPACT of inflation on FIRMS

Answer 7

Question 8

Explain the IMPACT of inflation on GOVERNMENTS / ECONOMY

Answer 8

Question 9

What are the two TYPES of inflation?

Answer 9

Question 10

FISCAL POLICIES (Demand-Side Policies) to reduce inflation

Answer 10

Question 11

MONETARY POLICY (Demand-Side Policies) to reduce inflation

Answer 11

Question 12

SUPPLY SIDE POLICIES to reduce inflation

Answer 12

Question 13

What measures will the Government adopt to CONTROL inflation?

Note, you can use any of the policy (Fiscal, Monetary, supply-side) examples

Answer 13