Economics (AS & A Level) · Oct / Nov 2024 · Paper 12 · Question 19

In an economy with an interest rate of 4% per annum, the rate of inflation falls from 5% to 3% per annum. What will be a benefit of this fall?

1. AMenu costs will fall to zero.
2. BPeople on fixed incomes will be better off in real terms.
3. CSavers will gain in real terms.
4. DThe purchasing power of the currency will rise.

As printed in the paper