The data below shows economic growth rates, unemployment rates, and inflation rates for a hypothetical economy between 2021 and 2024.
| Year | Real GDP growth rate (%) | Unemployment rate (%) | Inflation rate (%) |
|---|---|---|---|
| 2021 | 3.8 | 4.1 | 3.2 |
| 2022 | 1.6 | 5.3 | 1.5 |
| 2023 | -0.4 | 6.8 | 0.4 |
| 2024 | -2.1 | 8.2 | -0.9 |
All other things being equal, which one of the following is the most likely explanation for the relationship between the rates of growth of real output, rates of unemployment, and inflation over this period?
A significant depreciation in the external value of the national currency.
A major structural improvement in labor productivity across the national economy.
A sustained contraction in aggregate demand, driven by tight monetary and fiscal policy.
A series of severe supply-side shocks, such as a sharp rise in global energy prices.
222 exam-style questions on AQA A Level Economics 2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts, covering 2.2.1 The circular flow of income, 2.2.2 Aggregate demand and aggregate supply analysis, 2.2.3 The determinants of aggregate demand, 2.2.4 Aggregate demand and the level of economic activity, 2.2.5 Determinants of short-run aggregate supply, and 2.2.6 Determinants of long-run aggregate supply. Each one has a worked solution and a mark scheme showing where the marks go.