Impact of Inflation | A-Level Economics Model Paragraph (AQA, Edexcel, OCR)
Inflation is when there is a rise in average price level. It is measured by the CPI which tracks the monthly prices of a weighted average basket of goods and services. If inflation was very high, and above the 2% target rate, this would be damaging to the UK economy. If prices are constantly rising, it is very likely that wages are not rising as often. If this is the case, disposable incomes would be falling as consumers would have less money left over after their normal spending. This would lead to a decline in living standards. Workers may ask firms for higher wages. Firms could then choose to increase wages and push prices up even more, or firms could lay-off workers. If firms decide to lay-off workers, then this would cause an increase in the unemployment rate.
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These A-Level Economics Notes have all been written personally. I studied Economics at UCL after studying A-Level Maths, Economics & Chemistry in 2017. I have been tutoring A-Level Economics since 2017 and wanted to create these model paragraphs and chains of reasonings to provide a foundation for writing detailed paragraphs in A-Level Economics essays. They are an excellent complement to the video tutorials available on my Youtube channel and my summary notes. For any additional questions, or for A-Level Economics tutoring, I welcome enquiries via this Form, Phone, or Whatsapp.