In a hypothetical Eurozone scenario, the Harmonised Index of Consumer Prices (HICP) inflation rate has fallen to -0.8% due to a combination of a strong Euro and a significant fall in global energy costs, while core inflation (excluding energy and food) remains positive at +0.5%, and Eurozone unemployment is at a record low.
With reference to the role of central banks in maintaining price stability, discuss whether the Governing Council of the European Central Bank (ECB) should be concerned about this period of deflation.
18 exam-style questions on Edexcel A A Level Economics 4.4.3 Role of central banks. Each one has a worked solution and a mark scheme showing where the marks go.