An economy is currently operating at its full employment level of output. It is estimated that the long-run trend rate of GDP growth of the economy is around 2.8% per annum. In the coming year, it is expected that inflation will be 4.2% per annum and money national income will grow by 5.0%.
Which one of the following is most likely to occur in the coming year?
Employment will rise, and the economy will grow above its trend rate.
Employment will rise, and the economy will grow below its trend rate.
Employment will fall, and the economy will grow above its trend rate.
Employment will fall, and the economy will grow below its trend rate.
327 exam-style questions on AQA A Level Economics 2.3 Economic performance, covering 2.3.1 Economic growth and the economic cycle, 2.3.2 Employment and unemployment, 2.3.3 Inflation and deflation, and 2.3.4 Possible conflicts between macroeconomic policy objectives. Each one has a worked solution and a mark scheme showing where the marks go.