The Monetary Policy Committee is considering whether to keep Bank Rate at 3.0% or increase it to 4.5%. The inflation target is 2%. Its forecasts for the following year are shown in the table.
| Bank Rate decision | CPI inflation | Economic growth | Unemployment rate |
|---|---|---|---|
| Keep at 3.0% | 3.3% | 1.7% | 4.5% |
| Increase to 4.5% | 2.4% | 0.8% | 5.2% |
Compared with keeping Bank Rate at 3.0%, which statement identifies the policy conflict in increasing it to 4.5%?
Inflation moves further from the target, while growth falls and unemployment rises
Inflation moves nearer to the target, while growth rises and unemployment falls
Inflation moves nearer to the target, while growth falls and unemployment rises
Inflation moves further from the target, while growth rises and unemployment falls
116 exam-style questions on OCR GCSE Economics 3.6 Monetary policy, covering 3.6.1 What is monetary policy, 3.6.2 Monetary policy and macro objectives, and 3.6.3 Effects of monetary policy. Each one has a worked solution and a mark scheme showing where the marks go.