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
Covered syllabus points
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
In 2023, the Chinese Government said that it would aim for an economic growth rate of 5% and a steady increase in both exports and imports. It was expected that higher output would be caused mainly by an increase in household spending, although this could also result in inflation. Another aim of the Chinese Government was to keep the unemployment rate at around 5.5%. China has an ageing population and an ageing labour force.
Analyse how an increase in household spending could cause inflation.
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