ConceptConceptDocsDocuments

CAIE IGCSE Economics 4.7.1 Definitions of inflation & deflation

Practise distinguishing inflation from deflation by reading price-level data, rates of change and effects on money values.

Syllabus
2027–2029
Course
Economics 0455

Exam points

  • distinguish deflation from a falling inflation rate using price-level graphs or tables
  • explain how inflation changes purchasing power, real debt values and confidence
  • evaluate whether deflation helps or harms an economy through jobs, exports and demand

4.7.1—Definitions of inflation and deflation question 1

[Maximum number: 2]

Jordan has a fixed foreign exchange rate with the US dollar. The monetary policy of Jordan, therefore, follows the monetary policy of the US very closely. Due to low confidence in the global economy in 2019, central banks around the world, including Jordan and the US, cut interest rates to stimulate growth. However, this may have conflicted with the macroeconomic aim of low inflation.

Define inflation.

All question bank results loaded