Question

Use a well labelled graph to explain why the introduction of maximum prices in the petrol industry will not be an ideal decision for the country's economy. (8)​

Answer 1

A country's economy will go on a decline if there is a hyperinflation in the petrol prices.

What is hyperinflation?

Extreme increase in prices in a very short span of time is regarded as the condition of hyperinflation. If there is hyperinflation in the petrol prices, its demand will be lowered and people will look for substitutes.

Thus, increase or hyperinflation in the petrol prices will lead to declining of a country's economy and will not serve as a wise decision.

Learn more about hyperinflation here:

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