Unit 3.3 · Macroeconomic Objectives
Low and Stable Inflation
AO2AO4Diagram required
Syllabus Requirement
Measurement using CPI, causes of inflation (demand-pull, cost-push), causes of deflation, and associated economic impacts.
Assessment Objectives
AO2Application and Analysis
AO4Use of Appropriate Skills
Summary
Inflation refers to the ongoing rise in the general price level of goods and services in an economy. Maintaining a low and stable inflation rate is crucial for effective economic decision-making by households, businesses, and governments, as it allows for better planning and reduces uncertainty in financial contracts.