DP Economics Questionbank

Distinguish between inflation and disinflation.

Calculate the inflation rate for 2013 and for 2015 for Country A. Enter your results in Table 1.

The consumer price index (CPI) is a weighted price index. Outline one reason why weights are used in the construction of the CPI.

Outline how a producer price index may prove useful in predicting future inflation.

Calculate the rate of consumer price inflation in 2016.

Using the GDP deflator, calculate the percentage change in real GDP between 2014 and 2015.

Calculate the inflation rate for 2014 and for 2015. Enter your results in Table 1.

Using the data in Table 1 to support your answer, identify two reasons why many economists would consider Country A’s economy to be performing poorly in 2012.

Calculate the cost of the typical basket in 2016.

The cost of the typical basket was $50 in 2017. Calculate the consumer price index (CPI) for 2017.

The consumer price index for 2014 was 101.23. Calculate the rate of inflation between 2014 and 2015 (the base year).

In 2019, nominal GDP was $102 874.55 million. Using data from Table 2, identify whether Country A experienced inflation or deflation or disinflation in 2019.

Define the term inflation indicated in bold in the text (paragraph [2]).

Identify a period in which Country Y experienced disinflation.

Calculate the total welfare loss resulting from the imposition of the tariff on chia seeds.

Explain two reasons why low and stable inflation is desirable.

Discuss the view that the redistribution of income is the most important impact that inflation has on an economy.

Discuss the view that deflation is more harmful than inflation.

Calculate the total welfare loss resulting from the imposition of the tariff on chia seeds.

Explain two reasons why governments attempt to avoid deflation.

Discuss the view that deflation will always be bad for an economy.

Discuss the view that deflation is more harmful than inflation.

Calculate the total welfare loss resulting from the imposition of the tariff on chia seeds.

Explain the factors that cause demand-pull and cost-push inflation.

Evaluate the effectiveness of using monetary policy to reduce the rate of inflation.

Explain why a high rate of inflation may negatively affect both a country’s export competitiveness and the level of capital investment by firms.

Discuss the view that the use of monetary policy is always the best way to reduce inflation.

Discuss whether an increase in interest rates is the most effective way of reducing the rate of inflation in an economy.

The government in Country Alpha reduces income taxes in 2019.
Using information from the graph to support your answer, explain the likely effect on the inflation rate and the unemployment rate.

Evaluate the view that inflationary pressures in an economy are best reduced using supply-side policies.

Using an AD/AS diagram, explain how Turkey’s reliance on energy imports is putting “further pressure on inflation” (paragraph [4]).

Explain two causes of demand-pull inflation.

Evaluate the effectiveness of interventionist supply-side policies in reducing demand-pull inflation.

Explain the causes of cost-push inflation.

Calculate the total welfare loss resulting from the imposition of the tariff on chia seeds.

Using the graph, determine short-run values for the unemployment rate in 2016 and the inflation rate in 2018. Enter your answers in Table 2 below.

Table 2

The government in Country Alpha reduces income taxes in 2019.
Using information from the graph to support your answer, explain the likely effect on the inflation rate and the unemployment rate.

The natural rate of unemployment in Country Alpha is 5 %.

On the diagram draw and label the long-run Phillips curve (LRPC).

The price of oil is expected to rise significantly, causing a sustained increase in energy costs.

Describe the likely effect of this sustained cost increase on the short-run Phillips curve (SRPC).

Explain the reason for your answer to part (d) (i).

Discuss the view that there will always be a trade-off between the unemployment rate and the inflation rate.

Explain why there is a possible trade-off between the unemployment rate and the inflation rate in the short run.

Calculate the total welfare loss resulting from the imposition of the tariff on chia seeds.