Spot the Flaw Arena
Identify the best answer and explain the flaws in the others.
🔥12streak
🏆825pts
Question 3 of 10
12-mark essay · Inflation
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⏱ Est. 6–8 min
A Answer A
Rising energy prices increase costs for businesses and households. This reduces consumer spending and causes demand-pull inflation as people have less money to spend on goods and services.
I think this is best
B Answer B
When energy prices rise, firms face higher production costs. They may pass these costs on to consumers through higher prices, causing cost-push inflation. This can lead to a general rise in the price level.
I think this is best
C Answer C
Rising energy prices increase firms' costs of production (e.g. transport, raw materials). Firms pass these higher costs onto consumers, causing cost-push inflation and a leftward shift of the short-run aggregate supply curve (SRAS₁ to SRAS₂).
I think this is best
Now identify the flaws in the other answers (select all that apply)
Think carefully about what's missing or incorrect in answers A and B.
A: Incorrect type of inflation
B: No diagram or reference to AS shift
A: Does not show the correct cause → effect chain
B: Lacks evaluation of how significant the effect might be
A: Too focused on demand, not costs
B: Incorrect definition of inflation