In the United States (US) Consumer Price Index (CPI), food has a weighting of 13.7%. In the Indian CPI, food’s weighting is 46.2%. What can be concluded from this? A Consumers in India spend more on food than US consumers. B Food is a bigger proportion of consumer spending in India than in the US. C The farming sector’s output of food is higher in India than in the US. D The price of food is rising more rapidly in India than in the US. The table shows the Consumer Price Index (CPI) of an economy over fiv e years. Between which years was the rate of inflation the greatest? A from year 1 to year 2 B from year 2 to year 3 C from year 3 to year 4 D from year 4 to year 5 What is the change in GDP per head, after taking account of price increases (real change), between 2000 and 2013? A from $15 to $125 B from $1250 to $1333 C from $1333 to $1250 D from $1333 to $1500 The table shows the Consumer Prices Index (CPI) for selected cities for August 2015 relative to New York, USA at 100 , What can be co ncluded from the table? A Geneva had the highest average price level. B Living standards were highest in Lima. C Singapore was more expensive than Oslo. D The annual rate of inflation was the same in Istanbul and Johannesburg. What is included in the calculation of a consumer prices index (CPI)? A the price of a basket of goods and services B the price of exports and the price of imports C the value of the currency on international markets D the wages of consumers What determines the weights in the consumer prices index (CPI)? A the average income received by the various households B the average increase in the prices of the different goods C the proportion of income spent by the average household on particular goods D the proportion of income that the average household saves What is used to measure inflation? A the consumer prices index (CPI) B the exchange rate C the gross domestic product (GDP) D the index of workers’ wages Rates of inflation and deflation are measured using a consumer prices index (CPI) over a period of time The table shows average rates of CPI for Japan from 2010 – 2014. In which period did Japan experience deflation followed by inflation? A 2010 – 2011 B 2011 – 2012 C 2012 – 2013 D 2013 – 2014 The table shows the Consumer Prices Index (CPI) of an economy. What can be concluded from the data? A Prices fell between years 4 and 5. B Prices rose in every year. C The rate of inflation rose 5% in year 4. D There was a fall in living standards by yea r 5. What is included in the construction of the Consumer Prices Index (CPI)? A a base year B incomes C price elasticity of demand D quantity supplied The table shows changes in the Consumer Prices Index (CPI) from the base year, 1, and for the next three years. Which statement is correct? A Consumer prices were highest in year 3. B The rate of inflation was 2.1% in year 4. C The rate of inflation was highest in year 2. D The rate of inflation was lowest in year 1. The table shows the Consum er Prices Index (CPI) of a country for five years.year CPI Which statement about the country is correct? A It faced deflation in year 2. B It faced deflation in year 3. C It faced inflation in year 4. D It faced inflation in year 5. A government lowers interest rates to encourage more borrowing and spending by households to increase economic growth. Why could this lead to a conflict with other government aims? A It could cause uncertainty and lead to lower demand. B It could encour age more savings and lead to higher unemployment. C It could lead to lower prices of consumer goods and result in deflation. D It could stimulate consumer demand and lead to inflation. An economy experienced deflation. Which combination shows the likely outcome of this? What is defined as ‘a reduction in gross domestic product (GDP) for more than two successive quarters’? A deflation B falling wages C recession D rising unemployment Deflation is a sustained fall in the general price level. What might cause deflation? A insufficient private capital investment B loss of confidence in the government’s economic policies C rising oil prices D shortages of skilled labour in relation to demand What is likely to happen when a country is experiencing deflation? A Consumers delay spending. B Governments raise interest rates. C The level of imports increases. D The real value of money falls. The table shows the Consumer Prices Index (CPI) of a country for five years. Which statement ab out the country is correct? A It faced deflation in year 2. B It faced deflation in year 3. C It faced inflation in year 4. D It faced inflation in year 5. What may cause deflation? A advances in technology and increases in labour productivity B government using a policy of very low interest rates C increases in the costs of production that reduce firms’ profits D increases in the rate of inflation as measured by the CPI What will deflation most likely lead to? A a fall in the real value of debts B an increase in the exchange rate C an increase in the rate of interest D an increase in the real purchasing power of money What must be a consequence of deflation in a country? A a decrease in its exports B a decrease in its saving C an increase in its employment D an increase in the real value of its money What will increase when there is a period of deflation during which the general price level continues to fall? A confidence of investors B consumer demand C unemployment D wage rates In 2009, a country had an inflation rate of 2%. The table shows the inflation rate in the following years. In which year did deflation start? A 2010 B 2011 C 2012 D 2013 Who is made worse off during a period of deflation? A cash holders B creditors C debtors D fixed income earners What is meant by deflation? A a fall in the general price level B a fall in the international value of a currency C a fall in the rate of inflation D a fall in the real value of money Which country is suffering from the worst deflation? In Uganda, the rate of inflation fell from 5% in 2014 to 2% in 2015. Which conclusion can be drawn from this information? A Prices were higher in 2015 than in 2014. B The cost of living fell between 2014 and 2015. C The standard of living fell between 2014 and 2015. D Ugandan citizens were better off in 2015 than 2014. A country is experiencing a period of full employment. What is most likely to lead to an increase in demand - pull inflation? A an increase in government spending B an increase in imports C an increase in income tax rates D an increase in sales tax The table shows th e percentage change from 2015 – 2016 in gross domestic product (GDP) and consumer prices for selected countries. Which country was suffering from economic recession and inflation? What is most likely to cause a rise in the rate of inflation in an econom y? A a fall in import prices B a fall in wage rates C a rise in the level of government spending D a rise in the level of unemployment In January 2016 the rate of inflation in a country changed from 3% to 2%. In March 2016 the rate of inflation was 4%. What happened to the price level in January and March? What might cause prices to rise because of cost - push inflation? A an increase in government spending on education B an increase in household consumption C an increase in the balance of payments surplus D an increase in wages and salaries Venezuela, a leading world oil producer, has experienced hyperinflation of over 400% per annum in recent years. How does hyperinflation affect an economy? The graph shows the rate of inflation in a country between 2000 and 2014. What can be concluded about average prices? A They fell throughout the period. B They peaked in 2000. C They rose each year. D They were lower in 2014 than they were in 2010. A person receives annual interest of 4% on their savings. Inflation is 5% per annum. What is the approximate change in the real value of their savings? A – 5% B – 1% C + 4% D + 9% An increase in which of the following is least likely to cause inflation? A consumer spending B g overnment spending C income tax D wages The table gives information about three economic indicators in four countries. What may be concluded from this information? A Countries with higher inflation have higher interest rates. B Countries with higher interest rates have lower unemployment. C The country with the lowest inflation had the highest unemployment. D The country with the lowest unemployment had the lowest inflation. A government has a contractionary fiscal policy to reduce inflation . What will the government increase? A expenditure on infrastructure B income tax rates C personal tax allowances D unemployment benefits What would not be required in the construction of an index of consumer prices? A the selection of a base year B th e selection of a representative range of items C the calculation of average wage levels D the weighting of each item in the index A country has rapidly increasing inflation. What is an example of a monetary policy measure to reduce this problem? A incre asing income tax B increasing interest rates C introducing maximum prices for some products D subsidising key industries The table shows some data about an economy. What happened in year 1? A Both prices and real incomes fell. B Both prices and real incomes rose. C Prices fell but real incomes rose. D Prices rose but real incomes fell. In a year, two changes occurred in a company. Company directors’ salaries increased by 15%. Office workers’ wages increased by 5%. The rate of inflation wa s 3.4%. What happened to real income? An economy has a high rate of inflation. In response to this, its government increases income tax. What is the most likely reason for this increase? A to discourage the consumption of harmful goods B to raise mon ey for government spending C to redistribute income D to reduce total demand Interest rates are sometimes raised to control inflation. Why might this policy be effective? A Consumers may save more. B Government spending may increase. C Investment may be encouraged. D The exchange rate may fall. A country’s inflation rate, measured by the Consumer Prices Index (CPI), was 3% in year 1. Three years later it was 0.8%. What can be concluded from this information? A Prices are falling. B Th e rate of price increases is falling. C The real rate of interest is negative. D There is increased purchasing power for those on fixed incomes. In 2013 there was a period of low interest rates and high inflation in an economy. Who would be most likely to benefit and who most likely to lose during such a period? When might rapid inflation together with low interest rates be a source of concern for a consumer? A when a consumer lives on a pension linked to the consumer price index B when a cons umer needs to use savings for regular expenditure C when a consumer pays a fixed rent for their accommodation D when a consumer wishes to buy a good on credit In 2008, economic conditions in the UK were uncertain and the rate of inflation increased. It was reported that consumers had increased their purchases of rare stamps which continued to rise in value. What is not a reason for such purchases? A to avoid risk B to diversify their investments C to overcome the effects of inflation D to switch from spe nding to borrowing The information below relates to selected countries in 2012. What can be concluded from this information? A Inflation is a possible cause of unemployment. B Inflation is the only cause of unemployment. C Low unemployment is linked to high inflation. D There is a uniform link between the rate of inflation and unemployment. Who is most likely to benefit during a period of inflation? A creditors (lenders) B debtors (borrowers) C fixed income earners D holders of cash The table shows some economic indicators for four countries. country inflation unemployment GDP growth What can be concluded from the table? A high GDP growth occurred with low unemployment B high inflation occurred with high GDP gr owth C low GDP growth occurred with low inflation D low inflation occurred with high unemployment When would an increase in aggregate demand be least likely to result in inflation in an economy? A when it is the result of an increase in government expe nditure B when it is the result of an increase in expenditure on consumer goods C when there are substantial unemployed resources in the economy D when there is a substantial increase in expenditure on imports The table gives information about three economic indicators in four countries. What may be concluded from this information? A Countries with higher inflation have higher interest rates. B Countries with higher interest rates have lower unemployment. C The country with the lowest inflatio n had the highest unemployment. D The country with the lowest unemployment had the lowest inflation When is a tax progressive? A when some goods have a higher tax than others B when the rate of tax increases as income increases C when the tax is linked to the rate of inflation D when the tax is on incomes rather than on goods or services Which policy aims to maintain low inflation over a period of time? A imposing a minimum wage to be paid to workers B reducing interest rates to encourage borr owing C restricting the supply of money through the central bank D writing off the debts of low - income countries What would be a cause of cost - push inflationary pressure in an industry which supplies mobile (cell) phones? A an increase in advertising e xpenses for mobile phones B an increase in export duties on mobile phones C an increase in income taxes on wages of employees D an increase in world demand for mobile phones A basket of goods is used to calculate a country’s rate of inflation. What is i ncluded in the basket of goods? A a representative sample of current household spending B all goods bought in the country C the spending on an unchanging group of necessities D the 50 most popular items of household spending What is likely to assist a government’s policy of reducing inflation? A allowing businesses to borrow money for longer periods B encouraging the public to spend more money C increasing lending to members of the public D raising the interest rate on credit card borrowing