Syllabus: OCR - GCSE Economics
Module: 3. Economic Objectives and the Role of Government
Lesson: 3.4 Price Stability
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Introduction
Price stability is one of the core macroeconomic objectives outlined in the OCR GCSE Economics (J205) specification. As part of Component 02 – “National and International Economics”, this topic helps learners understand how inflation affects individuals, businesses and the wider economy. Teaching this module enables students to connect economic theory to real-life policy decisions, consumer behaviours and business strategies.
It also supports wider school priorities: it builds financial literacy, introduces risk-awareness, and strengthens students’ understanding of how government action shapes economic wellbeing.
Key Concepts
According to the OCR specification, students should be able to:
Define price stability and understand the difference between inflation, deflation and disinflation.
Identify causes of inflation, including demand-pull and cost-push factors.
Explain the consequences of inflation for consumers, producers, savers, borrowers and the government.
Analyse how inflation is measured, using indices such as the Consumer Prices Index (CPI).
Evaluate how government policies—monetary and fiscal—can be used to control inflation.
These ideas underpin real-world economic understanding and lay the groundwork for later study in A Level Economics or Business.
Real-World Relevance
Price stability isn’t abstract—it’s something students and their families feel every day. Take the UK’s recent inflationary spike between 2022–2023, where rising energy and food prices saw the CPI peak above 10%. Students can relate this to increased prices in school lunches, transport fares or family grocery bills.
A practical case study might explore:
How Bank of England interest rate rises attempted to curb inflation.
The implications of higher inflation on fixed-income households.
Business decisions, such as price increases or wage negotiations, in response to rising costs.
You can also draw connections to global scenarios like Turkey’s hyperinflation or the cost-of-living pressures in post-pandemic economies. These examples anchor abstract concepts in students’ lived realities.
How It’s Assessed
OCR assessments test this topic through both short-answer and extended response formats. Typical command words include:
Explain – e.g. “Explain two consequences of rising inflation.”
Analyse – e.g. “Analyse the impact of inflation on consumers and producers.”
Evaluate – e.g. “Evaluate whether interest rate increases are the best way to control inflation.”
Students may be asked to interpret data from CPI charts, apply contextual reasoning, or construct chains of argument about government policies. Quantitative reasoning, diagram analysis and real-world application are crucial.
Enterprise Skills Integration
Teaching price stability offers multiple entry points for active learning:
Decision-making: Students explore trade-offs in monetary policy—should the government prioritise inflation control over growth?
Critical thinking: Analysing opposing views about interest rate changes and who benefits or loses from them.
Problem-solving: In group tasks, students could role-play government advisors debating inflation responses.
Numeracy and interpretation: Using CPI data to calculate inflation rates or track index changes over time.
Enterprise Skills’ Business Simulations can be tailored to include inflation shocks—letting students experience how economic decisions play out in a dynamic market. This moves them from memorising definitions to thinking like economists.
Careers Links
Understanding price stability links directly to careers in:
Economics and public policy (e.g. Bank of England, Treasury analysis teams)
Banking and finance, where inflation affects interest rates, investments and pensions
Business strategy, especially in pricing, procurement or budgeting roles
Accountancy and actuarial science, where inflation is a key variable in long-term projections
This topic supports Gatsby Benchmarks 4 (linking curriculum learning to careers) and 5 (encounters with employers) through case studies and employer-led workshops.
Teaching Notes
Common pitfalls:
Students often confuse inflation with rising prices generally—emphasise the importance of percentage change and sustained trends.
CPI and RPI differences can be conceptually tricky—use real basket examples to demonstrate the measurement process.
Diagrams of demand-pull and cost-push inflation should be explicitly linked to real events (e.g. energy price surges).
Classroom tips:
Use CPI data from the Office for National Statistics in mini research tasks.
Try a “Who suffers most?” activity—students adopt roles (borrower, pensioner, business owner) to argue their inflation experiences.
Scaffold extended responses using “PEE” or “ACE” structures for evaluation.
Extension ideas:
Compare UK inflation management to other economies (e.g. Japan’s deflationary challenge or Zimbabwe’s hyperinflation).
Discuss ethical implications of policy trade-offs—who bears the brunt of interest rate rises?
