Gce Model Questions Vol1 2023 Economics Question 9

Practice essay / theory question 9 from the 2023 Gce Model Questions Vol1 Economics examination. This question covers Inflation, Monetary Policy, Fiscal Policy, Exchange Rate .

Gce Model Questions Vol1 2023 Economics Essay / Theory
Topics: Inflation Monetary Policy Fiscal Policy Exchange Rate
Question 9 GCE_MODEL_QUESTIONS_VOL1 • 2023 • ECONOMICS • essay

The Consumer Price Index (CPI) in Nigeria rose from 115 to 138 over the past twelve months, indicating a significant increase in the general price level. During the same period, the Central Bank of Nigeria increased the money supply (M2) by 12 % while the government ran a fiscal deficit equivalent to 8 % of GDP. The exchange rate also depreciated from ₦380 to the US$ per dollar. Answer the following questions:

Question Parts

( a )
Explain the difference between demand‑pull and cost‑push inflation. Based on the data given, which type of inflation is more likely to be the dominant cause in this situation and why?
( b )
Using the Quantity Theory of Money (MV = PY), discuss how the 12 % increase in the money supply could have contributed to the observed inflation, taking into account the possible changes in velocity (V) and real output (Y).
( c )
Recommend a coherent policy mix that the government and the Central Bank could adopt to bring inflation down to a single‑digit level within two years. Justify each measure in terms of its expected impact on inflationary pressures.

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About This Question

This is Gce Model Questions Vol1 2023 Economics Question 9. It is one of the essay questions from the 2023 Gce Model Questions Vol1 Economics examination.

The question covers Inflation, Monetary Policy, Fiscal Policy, Exchange Rate .

View More Gce Model Questions Vol1 2023 Economics Questions More Gce Model Questions Vol1 Practice Questions Back to Questions

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