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Cambridge IGCSE Economics practice

Paper 2 structured question: Inflation and deflation

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Inflation and deflation

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Paper 2Structured Questions3 marks

Understanding the dynamics of inflation and deflation is essential for economic analysis.

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Inflation and Deflation Dynamics

Inflation can lead to decreased purchasing power, while deflation can result in reduced consumer spending. Both phenomena have significant implications for economic policy.

  1. a

    Explain the impact of inflation on purchasing power.

    Aim for approximately 3 distinct marking points.

    [3]

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Paper 2 structured question: Inflation and deflation

Paper 2Structured Questions1 marks

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Causes of Inflation and Deflation

Inflation can be caused by demand-pull factors, where demand exceeds supply, or cost-push factors, where production costs rise. Deflation can occur due to decreased consumer demand or increased supply efficiency.

  1. a

    State two causes of inflation.

    Aim for approximately 1 distinct marking point.

    [1]