Question 1
The graph shows changes in the average price level.
When did the country experience deflation?
A
year 2 to year 5
B
year 2 to year 3
C
year 2 to year 4
D
year 4 to year 5
Question 2
A Consumer Prices Index (CPI) consists of four items. The table shows the percentage price change for each item over a period of a year and the weight of each item.
Which price change will affect the level of the CPI most?
item
\% price change
over 1 year
weight
food
+5
0.30
housing
+6
0.20
recreation
+3
0.40
transport
+4
0.10
Question 3
A country wishes to reduce the level of inflation.
Which combination of policy measures will be most successful?
policy measure 1
policy measure 2
decrease exchange rates
increase interest rates
decrease interest rates
increase exchange rates
increase government spending
decrease interest rates
increase interest rates
decrease government spending
All question bank results loaded