An economy is currently operating at its normal capacity level of output. The long-run trend rate of growth of the economy is estimated to be 2.0% per annum. Over the next year, it is predicted that inflation will be 5% per annum and money national income will grow by 8%. Which one of the following is most likely to occur?
Unemployment will fall and the economy will grow below its trend rate
Unemployment will fall and the economy will grow above its trend rate
Unemployment will rise and the economy will grow above its trend rate
Unemployment will rise 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.