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Economics · May / June 2020 · Paper 12 · Question 23

2281Inflation

The table gives information about three economic indicators in four countries. | | rate of inflation % | rate of interest % | rate of unemployment % | |---|---|---|---| | country W | 1.4 | 3.4 | 10.2 | | country X | 3.7 | 8.7 | 12.3 | | country Y | 3.6 | 7.3 | 14.2 | | country Z | 2.1 | 6.0 | 7.7 | What may be concluded from this information?

  1. ACountries with higher inflation have higher interest rates.
  2. BCountries with higher interest rates have lower unemployment.
  3. CThe country with the lowest inflation had the highest unemployment.
  4. DThe country with the lowest unemployment had the lowest inflation.

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Correct answer: A. Countries with higher inflation have higher interest rates.

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