Sample Economics Research Paper on What is the relationship between the cost of living and inflation

The Arab Monetary Fund (AMF) releases the seventeenth edition of the Arab economic outlook report including macroeconomic forecasts for Arab economies for 2022 and 2023


According to the Arab Monetary Fund, the expected economic growth rate for the Arab countries will rise to 5.4 per cent in 2022 due to rising oil prices, increased production in Arab oil-exporting countries, and the continuation of reforms that promote growth. Arab countries are expected to face relatively high inflation rates in 2022 due to local and global inflationary pressures.

The global economy is experiencing challenges related to global supply chains and high commodity prices, which raise concerns about global food security. This has led to international institutions reducing their forecasts for global economic growth issued earlier in January. It is expected that growth paths in Arab countries will be affected by significant factors during 2022 and 2023, including the impact of recent global developments on Arab economies, macroeconomic policies, and the continuation of financial packages and their impact on containing the repercussions of Covid-19.

The growth rate of Arab economies as a group is projected to rise to about 5.4 per cent in 2022, a significant increase from about 3.5 per cent in 2021. Many factors have contributed to this rise, including the relative improvement in global demand and high sectoral growth rates. There is also a positive impact of implementing economic reform programmes and adopting future visions and strategies to enhance economic diversification, improve business environments, encourage private investment, and improve economic resilience.

Nevertheless, the AMF expects Arab countries’ economic growth slow to about 4 per cent in 2023 due to the decline in global economic growth, commodity prices, and gradual exit from expansionary fiscal and monetary policies. The also report forecasts that oil-exporting countries in the Arab World will benefit throughout the year from the increased oil production quantities within the “OPEC+” agreement and relatively higher oil and gas prices in international markets, which will support public spending to enhance growth.

Overall, Arab oil producers are expected to grow by 6 per cent in 2022, compared to 3.2 per cent in 2021, while oil prices are expected to decline in 2023.




What you need to consider before you start your TMA

Before starting your TMA, research and ensure that the information needed for this TMA is available, this is very important since this TMA relies not only on course material but also on external resources that you will be choosing and referring to answer the question.



Your task is to write a structured essay in which you explain and analyse the above article in terms of course concepts from Chapter 1, Running the Economy. You are expected to answer the four parts of the following question:

What is the relationship between the cost of living and inflation?


Please read the following notes before you start writing your essay:

The cost of living affects all households in all societies. We ask questions about human well-being in various contexts; from the personal, “am I better off than I was five years ago”, to the intergenerational, “are we better off than our grandparents”. These differences in the cost of living are often reported as cost of living indexes, but what is the relationship between cost of living and inflation?

Part (a): Critically discuss the current cost-of-living situation in the country (or region) in which you live.

This is your introduction. The real-life example you discuss should provide you with sufficient scope to apply course concepts to analyse the cost-of-living situation in parts (b) and (c). This section should be around 300 – 400 words.

Part (b): Analyse the situation you describe in part (a) using relevant course concepts.

Define the relevant course concepts and then explain how these concepts can be used to analyse the article and the situation described in part (a). The focus of this section should be on how the economic theory of inflation can be used to measure the standard of living. This section should be no longer than 500 words.

Part (c): Discuss the economic and social implications of the cost of living described above in parts (a) and (b) in light of COVID-19.

Are there any socioeconomic implications arising from the article and/or the cost of living situation described in part (a)? Explain your answer and support this with appropriate economic theory. You should present your work in terms of expressions or equations and the results obtained, translate your data into diagrams and match the theory with your selected application. You should spend no more than 200 to 300 words on this part of the TMA.

Part (d): Discuss what policymakers could learn from your description and analysis in parts (a) to (c).

How could the issues discussed in parts (a) to (c) help policymakers? What could the people living in the society described in part (a) learn from your analysis in parts (b) and (c)?

This section should make some suggestions about how households could improve their standard of living (even slightly – there is always room for improvement) and suggestions that policymakers could implement to support improvements in standards of living. These suggestions should follow your discussion logically in parts (b) and (c) and can relate to any aspect of economic practice discussed in chapter 1. You should spend no more than about 350 to 450 words on this final part of the TMA.

Guidance notes for TMA

For this TMA, you are required to write a well-structured essay. Your TMA should be in the four parts indicated in the question above. It is acceptable to use headings for each of the four sections, but you should not number your paragraphs or include an executive summary or contents sheet. For this TMA, part (a) can be considered equivalent to the introduction to the essay and part (d) can be regarded as the conclusion.

Your essay should be within the specified range of words (1400 – 1500 words), and you must follow the Harvard Style of Referencing. The assessment of the quality of your essay will be based on how you impress the reader (grader) with your knowledge and understanding of the topic. Your TMA should be attached to the following PT3 form.