TEST SHEET 803 : 2020 - 2021 : TERM: I

DATE : 9/10/20 SUBJECT : ECONOMICS TOPIC : INFLATION TEST TYPE :CONTENT MARKS :20

NAME : ________________________________ CLASS / DIV. : AS A, B, C ROLL NO. : ___ INITIALS : A.F.

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ANSWER ANY ONE QUESTION

1. (a) Define each component of aggregate demand and, using a diagram, show how a reduction

in one of these components might reduce inflationary pressure in an economy. [8]

(b) Discuss the impact of a high rate of inflation on the consumers and producers in an economy

and assess whether consumers or producers would suffer more. [12]

OR

2. (a) Explain how a rise in the rate of interest might cause a shift in an economy’s aggregate
demand curve. [8]

(b) Discuss whether inflation is more likely to be caused by a shift in an economy’s aggregate demand
or a shift in its aggregate supply. [12]

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