Gce Model Questions Vol1 2023 Economics Question 23
Practice objective / multiple choice question 23 from the 2023 Gce Model Questions Vol1 Economics examination.
Two observations of the labour market are given:\n- When unemployment was \(6\%\), inflation was \(8\%\).\n- When unemployment was \(4\%\), inflation was \(5\%\).\nAssuming a linear Phillips‑curve relationship \(\pi = m u + c\) and a target inflation rate of \(6\%\), first find the unemployment rate that would achieve the target (the NAIRU). Then, using this curve, calculate the expected inflation if unemployment falls to \(5\%\). Give your final answer as a percentage to one decimal place.
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About This Question
This is Gce Model Questions Vol1 2023 Economics Question 23. It is one of the objective questions from the 2023 Gce Model Questions Vol1 Economics examination.
Difficulty level: Medium .
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