AQA A Level · 7136 · Paper 2: The national and international economy
4.2.3.3 Inflation and Deflation: Part 2
Also AQA AS 7135: 3.2.3.3
Everything you need on the quantity theory of money and on deflation, in the words examiners reward. An interactive seven-step lesson goes with it.
What's on this sheet
- The quantity theory of money
- Is the quantity theory right?
- Deflation: "good" and "bad"
- Why "bad" deflation is so dangerous
- Calculations
- Classic question: is deflation always bad?
- Side 2: practice tasks, where the marks go, and exam-style questions
- Separate answer key
The lesson in seven steps
- Does more money mean higher prices?
- Same falling prices, different stories
- Inflation, disinflation or deflation?
- Velocity, the quantity theory and real interest rates
- Money, prices and falling prices
- Build the chain
- Exam practice
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