Economics (AS & A Level) · May / June 2025 · Paper 32 · Question 22

A government sets a target for the annual rate of inflation to be no more than 3%. Which circumstances would make it difficult to achieve the target?

1. Aif devaluation of the currency leads to a trade surplus
2. Bif interest rates are increased to control effective demand
3. Cif the government increases its tax revenue
4. Dif wage increases are kept in line with productivity

As printed in the paper