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Economics Project Inflation

This project investigates the causes of inflation and its socio-economic impact on household purchasing power, focusing on demand-pull, cost-push, and monetary inflation. It recommends policy interventions such as contractionary monetary policy and supply-side reforms to mitigate inflation's negative effects. The study emphasizes the importance of maintaining a stable monetary environment to protect low-income households.

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10 views3 pages

Economics Project Inflation

This project investigates the causes of inflation and its socio-economic impact on household purchasing power, focusing on demand-pull, cost-push, and monetary inflation. It recommends policy interventions such as contractionary monetary policy and supply-side reforms to mitigate inflation's negative effects. The study emphasizes the importance of maintaining a stable monetary environment to protect low-income households.

Uploaded by

163102t75
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
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Z I M BABWE S C H O O L E X A M I N AT I O N S C O U N C I L ( Z I M S EC )

An Investigation into the Causes of Inflation and


its Socio-Economic Impact on Household
Purchasing Power

Economics School-Based Assessment Project


Ordinary Level

Candidate Name: [Your Name Here]

Year of Submission: 2026

ZIMSEC O-Level Economics Project - Inflation Analysis 1


STAGE 1: PROBLEM IDENTIFICATION

Inflation is the sustained increase in the general price level of goods and services in an economy over a
period of time, leading to a decline in the purchasing power of money. This project investigates the
drivers of inflation in our local economy and evaluates how rising costs impact the living standards of
low-income households.

STAGE 2: INVESTIGATIONS OF RELATED IDEAS

We investigate three primary drivers of inflation:

• Demand-Pull Inflation: Occurs when aggregate demand exceeds aggregate supply.


• Cost-Push Inflation: Driven by increases in the cost of production (wages, raw materials).
• Monetary Inflation: Caused by an excessive growth in the money supply.

STAGE 3: GENERATION OF IDEAS / POSSIBLE SOLUTIONS

Possible policy interventions include:

• Contractionary Monetary Policy: Raising interest rates to curb demand.


• Fiscal Policy Adjustments: Cutting government spending or raising taxes.
• Supply-Side Reforms: Increasing productivity to lower costs.

STAGE 4: DEVELOPMENT OF IDEAS

The study evaluates Contractionary Monetary Policy as the primary tool. While effective at curbing
demand, it may lead to slower economic growth, necessitating a balanced approach.

STAGE 5: PRESENTATION OF RESULTS

FACTOR IMPACT ON INFLATION EFFECT ON PURCHASING POWER

Excessive Money Supply High Negative

Rising Fuel/Energy Costs High (Cost-Push) Negative

Increased Domestic Output Low (Deflationary) Positive

ZIMSEC O-Level Economics Project - Inflation Analysis 2


STAGE 6: EVALUATION AND RECOMMENDATIONS

It is recommended that the government pursues supply-side reforms to boost production and maintains a
stable monetary environment to protect household welfare.

ZIMSEC O-Level Economics Project - Inflation Analysis 3

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