This question was not popular with the candidates; the few who attempted it scored
average marks. This resulted mainly from the fact that the candidates could only provide the correct answers for the (b) part of the question. The (a) and (c) parts were however not properly answered.

Candidates needed to answer thus to score the maximum marks for this question.

(a) A slow but steady rise in the prices of goods and services in general is known as creeping inflation.
On the other hand, when the rise in the prices of goods and services in general is persistent and rapid, it is known as hyper-inflation.
(b) (i) it discourages savings;
(ii) it discourages production and encourages buying and selling;
(iii) fixed income earners suffers;
(iv) the value of money falls;
(vi) standard of living falls;
(vi) it makes planning difficult e.g. Government proposed expenditure is increased;
(vii) it causes balance of payment problems.

(c) some of the ways in which the government can control inflation are:
(i) Government can use contractionary monetary policies to reduce money supply in order to reduce aggregate demand;
(ii) Government can use fiscal policy (tax policy) to reduce household and business incomes in order to reduce aggregate demand;
(iii) Government can reduce its expenditure in order to reduce aggregate demand.
(iv) Government can budget for a surplus and so reduce aggregate demand;
(v) Government can grant subsidies to producers to increase production;
Government can discourage importation from countries suffering from inflation;
(vii) Government can improve infrastructure to stimulate production;