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Inflation · Part 3 of 3
9 exam-style questions with model answers, plus 13 quick multi-choice questions — every question on this part of the standard, grouped by the 3 pages of notes they come from.
Write a full answer before you reveal the model one. That comparison is where the learning happens.
Explain whether a worker on the minimum wage would prefer a lower or a higher inflation rate.
Explain in detail one reason why a high inflation rate may cause income distribution in New Zealand to become more unequal.
New Zealand's annual inflation rate rises to 6%.
Compare and contrast the impact of this on savers and on borrowers in New Zealand, and on workers whose wages are set annually compared with superannuitants. Give a reasoned judgement about which of these four groups is worst affected.
Explain whether savers would prefer a lower or a higher inflation rate.
New Zealand's annual inflation rate is 4.7%. Annual inflation in New Zealand's major trading partners averages 2.5%.
Explain in detail the impact of this on New Zealand exporters.
New Zealand's annual inflation rate rises well above that of its major trading partners.
Compare and contrast the impact of this on New Zealand exporters and on New Zealand importers, and give a reasoned judgement about the overall effect on the New Zealand economy.
An economy experiences both a rise in consumer confidence and a fall in the world price of imported fuel.
State which curve each event shifts, and in which direction.
A large increase in government infrastructure spending occurs in the same year as a sharp rise in the cost of imported building materials.
Explain in detail the impact of each event on New Zealand's price level. Refer to the AS/AD model in your answer.
During one year, New Zealand experiences large-scale job losses across several industries, and in the same year petrol prices fall substantially.
Discuss whether the job losses or the fall in petrol prices will have the bigger effect on New Zealand's price level. Refer to the AS/AD model in your answer.