DP Economics
Question 21M.1.HL.TZ2.3a
| Date | May 2021 | Marks available | [Maximum mark: 10] | Reference code | 21M.1.HL.TZ2.3a |
| Level | HL | Paper | 1 | Time zone | TZ2 |
| Command term | Explain | Question number | a | Adapted from | N/A |
a.
[Maximum mark: 10]
21M.1.HL.TZ2.3a
(a)
Explain the causes of cost-push inflation.
[10]
Markscheme
Marks should be allocated according to the paper 1 markbands for May 2013 forward, part A.
Answers may include:
- definitions of inflation, cost-push inflation
- diagram showing cost-push inflation (increase in the price level due to decrease in SRAS)
- explanation that cost-push inflation is caused by an increase in the costs of factors of production
- example(s) of specific policies/events that may cause cost-push inflation, examples of economies that have experienced cost-push inflation (e.g. USA in the 1970s).
Examiners report
This question was usually well done, most candidates were pretty clear about what cost-push inflation is. The question asks for causes, so more than one was advisable. In general, appropriate diagrams were drawn and labelled to show the impact of cost-push inflation. A minority of candidates confused cost-push inflation with demand-pull inflation. That of course, seriously undermined their response. Real-world examples were used but were often very generic in nature.
