Question:

4 (a) In 2021, year-on-year inflation in many economies increased to a level not experienced for

fifty years.

With the help of a diagram, explain what is meant by cost-push inflation and consider whether

this type of inflation has affected your own economy since 2021. [8]

(b) Assess whether the potential benefits of an increasing rate of inflation outweigh the potential

costs for an economy. [12]

Sample Answers: