WHALES AS Economics: Inflation

What is the most likely cause of cost-push inflation in an economy?

A an increase in the exchange rate

B an increase in the money supply

C an increase in the prices of imports

D an increase in the rate of income tax

• A

• B

• C

• D

The table shows the consumer price index (CPI) for a country. What can be concluded from the table?

A Prices fell continuously from year 2 to year 5.

B Prices rose between year 1 and year 5.

C Prices rose only from year 1 to year 2.

D Prices were at their highest in year 5.

• A

• B

• C

• D

The table shows information about a country whose consumers spend their income on three commodities, P, Q and R. Between year 1 and year 2 how has the general level of prices changed?

A It has risen by 40%.

B It has risen by 10%.

C It has remained the same.

D It has fallen by 5%.

• A

• B

• C

• D

The UK inflation rate as measured by the Consumer Price Index was 5.2% in September 2011. In June 2014 the UK inflation rate as measured by the Consumer Price Index was 1.6%. What can definitely be concluded about the period September 2011 to June 2014?

A Fixed income earners had increased purchasing power.

B Prices were falling.

C The rate of price increases was slowing.

D The real rate of interest became positive.

• A

• B

• C

• D

If a country has a surplus in its balance of payments then its money supply is likely to

A fall because more of its goods were purchased by foreign consumers than by consumers at home.

B increase because the foreign currency received for exports will be exchanged for domestic currency.

C remain constant because the surplus is automatically offset by a loan for the deficit countries.

D remain unchanged because its exports are bought with foreign currency.

• A

• B

• C

• D

The table shows the share of a worker’s income spent on three classes of good and the percentage change in the prices of the goods over a year. Over the same period the worker’s money income rises by 25%. What happens to the worker’s real income?

A It falls by 25%.

B It falls by 50%.

C It rises by 25%.

D It is unchanged.

• A

• B

• C

• D

Over a period of a year, the annual rate of inflation becomes negative. Which statement must be correct?

A The cost of living has fallen.

B The purchasing power of money has fallen.

C The standard of living has increased.

D There has been an increase in the Consumer Price Index.

• A

• B

• C

• D

What would be likely to increase inflation in an economy?

A an increase in consumer saving

B an increase in interest rates

C an increase in labour productivity

D an increase in taxes on imports

• A

• B

• C

• D

The table shows a country’s consumer price index for March and April 2015. Which statement correctly describes what happened between these two months?

A There was a decrease in the annual rate of inflation.

B There was a decrease in real interest rates.

C There was an increase in the purchasing power of money.

D There was an increase in the standard of living.

• A

• B

• C

• D

The table shows the retail prices index for four countries for years 2 and 3. (Year 1 index = 100 for all countries.) Which country had a higher rate of inflation in year 2 than year 3?

• A

• B

• C

• D