WASSCE Economics · Paper 1 style

Inflation

One sample question with the full working. 3 more in the app, with instant feedback and repair sessions for the traps below.

Inflation is best described as

Aa persistent rise in the general price level
Ba rise in the price of one good
Can increase in the quantity of goods
Da fall in unemployment

Show the answer and working

Answer: A

Inflation: general price level rises persistently.

Trap B Gives only part of the answer: List every component in the definition (GDP = C + I + G + (X − M)) and tick them off before answering.

Trap C Reverses the direction of the effect: Trace the chain step by step (e.g. buying securities → banks gain cash → money supply rises) and check the sign at every link.

Trap D Misunderstands types and measurement of unemployment: Unemployment rate = unemployed/labour force × 100 (labour force = employed + unemployed). Frictional: between jobs. Structural: mismatch of skills/industries. Cyclical: lack of aggregate demand. Seasonal: varies with seasons.

Traps in Inflation

Gives only part of the answer
List every component in the definition (GDP = C + I + G + (X − M)) and tick them off before answering.
Reverses the direction of the effect
Trace the chain step by step (e.g. buying securities → banks gain cash → money supply rises) and check the sign at every link.
Misunderstands types and measurement of unemployment
Unemployment rate = unemployed/labour force × 100 (labour force = employed + unemployed). Frictional: between jobs. Structural: mismatch of skills/industries. Cyclical: lack of aggregate demand. Seasonal: varies with seasons.
Chooses a true but irrelevant statement
Re-read the question's key term and test each option against it, not against whether it is true in general.
Inflation misconceptions
Demand-pull: too much money chasing few goods. Cost-push: rising costs. Debtors and holders of real assets gain; creditors and fixed-income earners lose.
Exchange rate misconceptions
Devaluation lowers the value of the home currency: exports become CHEAPER abroad and imports DEARER at home. Success needs elastic demand (Marshall–Lerner).
Confuses monetary and fiscal policy tools
Monetary (central bank): interest/policy rate, open market operations, reserve requirements. Fiscal (government): taxation and public spending, budget deficit/surplus.
Confuses GDP, GNP and NNP
GNP = GDP + net factor income from abroad. NNP = GNP − depreciation. Per capita = total ÷ population.

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