Economics (AS & A Level) · Oct / Nov 2021 · Paper 11 · Question 22

A developed country has a price-inelastic demand for oil, all of which it imports. The oil-producing countries increase the supply of oil. What is likely to happen to the developed country's rate of inflation and its balance of trade?

1. Adecreases; improves
2. Bdecreases; worsens
3. Cincreases; improves
4. Dincreases; worsens

As printed in the paper