CAIE A-Level Economics 4.6.3 Nominal and Real Data

CAIE A-Level Economics 4.6.3 Nominal and Real Data
Cambridge International AS & A Level Economics 9708 syllabus for exams in 2026, 2027 and 20282026–2028

Practise deflating nominal prices, wages and interest rates with CPI or inflation data and deciding whether purchasing power or real returns have risen or fallen.

How this is tested

  • deflate a nominal value by the relevant price index to express it in base-year prices
  • calculate the approximate real interest rate as nominal interest minus inflation
  • compare money-income growth with inflation to determine the change in real income

Question 20

[Maximum number: 1]

The price of a pack of six eggs rises from $ 1.00 to $ 1.32 over a year. Consumer prices, as measured by the consumer price index, rise by 10% over the same period.

What is the real price of a pack of six eggs at the end of the year?

A

$ 1.00

B

$ 1.10

C

$ 1.20

D

$ 1.32