Impacts

Question 1

Households (5)

Answer 1

Increased income inequality as low-income earners will generally be on fixed incomes.
Fiscal drag (tax brackets)
Disadvantage as purchasing power or savings decreases.
Borrowers advantages as the real value of repayment decreases
Consumer confidence is low as there is uncertainty around future prices so planning is difficult.

Question 2

Firms (5)

Answer 2

Uncertainty of future prices makes it difficult to make investment decisions and plans
Cost of production may reduce profitability if unable to be passed on to the consumer
Expensive to replace capital
disadvantage as New Zealand goods are less price competitive
Importers advantage assuming inflation is limited in New Zealand

Question 3

Nominal Value

Answer 3

Value of something in current years, actual price

Question 4

Real Value

Answer 4

Nominal figures that have been adjusted for inflation

Question 5

Household list (6)

Answer 5

Borrowers
savers
asset owners
lenders 
income changes
fixed-income earners

Question 6

Answer format

Answer 6

State group
Win or lose
explain