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Tutorial on - Monetary policy and Inflation

Price stability is one of the important elements for investor and consumer
You are expected
to submit the
tutorial at the end
of the 7th week.

confidence in an economy.

a. There are many causes for inflation. Explain any 5 (FIVE) causes.

21st August

(5 Marks)
b. Define and explain the terms Headline inflation and Core inflation.
(5 Marks)
c. Explain why core inflation is more important than headline inflation for
economic decision making
(5 Marks)

d. Maintaining price stability is one of the prime macroeconomic

objectives of any government monetary policy Evaluate the
effectiveness of any 4 (FOUR) measures the government can take to
manage the price stability of an economy? You may use examples from
Sri Lanka

Total 30 Marks

You may spend 3 hours to complete this task.

World limit :1200 words (maximum)


1. Slomans John, Alison Wride 7ed. (2009), Economics. Chapter 15

Pages 416 435
2. Price Stability Pamphlet series no 1. Central Bank of Sri Lnaka
3. Daily FT newspaper recent articles on this topic