What this practice covers
These questions are drawn from past IB Economics papers and filtered to low and stable inflation. You answer, you find out immediately whether you were right, and you get the reasoning for the correct option and for each distractor. Wrong answers go to a mistakes locker so you can come back to exactly those.
Practice is free. You need an account only so your progress and your mistakes are still there next time.
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What examiners see students get wrong here
These are the errors that cost marks on low and stable inflation, taken from our own topic notes. Read them before you practise and you will recognise the traps in the questions.
- Confusing disinflation with deflation.
- Saying inflation means "prices are high", it means prices are rising.
- Explaining demand-pull inflation without reference to spare capacity.
- Shifting AD for a cost shock, or SRAS for a demand shock.
- Averaging price indices without applying the weights.
- Presenting inflation as purely a loss, ignoring that it redistributes from lenders to borrowers.
- Forgetting that anticipated inflation does much less damage than unanticipated inflation.
- Treating deflation as good news.
Revise it first
If any of the above is unfamiliar, work through the notes before practising: Low and Stable Inflation revision notes.