Inflation

(a) Explain one reason why consumers buy less than the social optimum quantity of healthy food.

(b) With reference to Extract B, examine two likely reasons why wages in supermarkets are above the National Minimum Wage of £10.42.

(c) With reference to Figure 1 and Extract C, discuss whether supermarkets charging similar prices for petrol is evidence of collusion. Use game theory to support your answer.

EITHER

(d) Evaluate the microeconomic and macroeconomic effects of high levels of inflation. Refer to the UK or any other developed economy in your answer.

Explain one reason why consumers buy less than the social optimum quantity of healthy food.

With reference to Extract B, examine two likely reasons why wages in supermarkets are above the National Minimum Wage of £10.42.

With reference to Figure 1 and Extract C, discuss whether supermarkets charging similar prices for petrol is evidence of collusion. Use game theory to support your answer.

EITHER

Evaluate the microeconomic and macroeconomic effects of high levels of inflation. Refer to the UK or any other developed economy in your answer.

Evaluate the microeconomic and macroeconomic effects of a regional trade agreement between the UK and the EU.

Write your answer here:

Explain the difference between a positive and a normative statement, using an example of each from Extract A.

Examine two reasons for the rise in inflation in the UK. Refer to the information provided in your answer.

Discuss the likely impact of a rise in gas prices on a firm that uses a large amount of gas in its production process. Use a cost and revenue diagram to support your answer.

EITHER

Evaluate microeconomic and macroeconomic policies that could be used to reduce inequality in the UK.

Evaluate the likely microeconomic and macroeconomic effect of tax cuts in the UK.

Write your answer here:

Monthly additions to UK credit card lending, £ billions, 2015 – 2017

(Source: https://www.ukfinance.org.uk/statistics/cards/)

Which one of the following would be most likely to cause an increase in credit card lending?

of payments

Using the chart, calculate an index number for additions to credit card lending in March 2017, using January 2016 as the base. You are advised to show your working.

Explain one possible link between an increase in credit card lending and the rate of inflation.

With reference to Extract D line 21, explain why ‘opportunity cost’ is a problem for governments of developing countries when servicing debt.

Examine two reasons, apart from access to finance, why 90% of the manufacturing sector in Mozambique ‘is made up of small enterprises’ (Extract E, line 9).

Discuss whether borrowers benefit from microfinance. Make reference to Mozambique in your answer.

EITHER

Evaluate the microeconomic and macroeconomic factors, apart from access to credit and banking, influencing growth and development in Mozambique.

Evaluate the likely microeconomic and macroeconomic effects of relatively high inflation rates in many African countries.

Write your answer here:

Which one of the following statements is correct about the UK’s inflation record between September 2011 and January 2013?

Based on the data shown, the UK experienced:

With reference to the data provided, explain the process of calculating the rate of inflation in the UK using the Consumer Prices Index. Refer to the concept of weights in your answer.

With reference to Figure 1, calculate the percentage change in the value of the euro in pounds from the start of 2009 to the start of 2015.

With reference to the information provided and your own knowledge, examine two factors which might explain the change in the rate of Eurozone inflation as shown in Figure 2.

Since mid-2015 the euro has appreciated. Assess the likely impact of an appreciation of the euro on the current account of the balance of payments for Eurozone countries.

Discuss the likely success of the ECB’s quantitative easing programme in moving Eurozone inflation closer to ‘the central bank’s ceiling of 2%’ (Extract A, line 17).

Discuss ‘looser fiscal policy’ and ‘supply-side reforms’ (Extract A, lines 20 and 21) that may be used by governments of Eurozone countries to increase economic growth.