Economics (AS & A Level) · Oct / Nov 2024 · Paper 32 · Question 23

The table shows the percentage of labour force unemployed and the rate of inflation in a country over a five-year period. | year | unemployment % | inflation % | |---|---|---| | 1 | 3.5 | 4.0 | | 2 | 4.1 | 3.6 | | 3 | 4.3 | 2.5 | | 4 | 4.5 | 2.2 | | 5 | 4.8 | 2.0 | Which statement about the application of the Phillips curve theory to this country is most supported by the data?

1. AThe data are entirely consistent with the theory of the Phillips curve.
2. BThe data prove conclusively that the Phillips curve theory does not operate.
3. CThe data suggest that no conclusions can be reached about the validity of the Phillips curve theory.
4. DThe data suggest that the theory of the Phillips curve is correct, though with time lags.

As printed in the paper