Context 2: Inflation and monetary policy in the UK
Extract D: The UK's Consumer Prices Index (2015 = 100) rose from 131.5 in March 2023 to 134.9 in March 2024. CPI inflation had peaked at over 11% in October 2022, driven by energy and food prices after Russia's invasion of Ukraine.
Extract E: The Bank of England raised Bank Rate fourteen times from 0.1% in December 2021 to 5.25% in August 2023. Mortgage rates rose sharply and house prices fell slightly. Some economists argued that rates were raised too late; others that much of the inflation came from global supply shocks that interest rates could not affect.
Extract F: Wage growth reached around 8% in 2023, partly due to labour shortages. The government kept income-tax thresholds frozen, which increased tax revenue as wages rose ('fiscal drag'). Unemployment rose slightly from 3.8% to 4.3%. Productivity growth remained weak.
From Paper 2: National and international economy
12 marks
Using Extract D, calculate the rate of CPI inflation between March 2023 and March 2024.
From Paper 2: National and international economy
24 marks
Using the data, explain what happened to real interest rates between 2021 and 2024.
From Paper 3: Economic principles and issues
211 mark
Nominal GDP grows by 6% and the price level rises by 4%. Real GDP grows by approximately:
Score 0 / 7 · 0 of 3 marked
This paper is written by Plasmo in the style of the AQA A-Level Economics exam. It is not a past paper and is not produced or endorsed by the exam board.