A-LevelEconomicsThe macroeconomy9708/12 · May/June 2012 · Q251 Mark
A country experienced a significant fall in unemployment but its inflation rate remained low. What could explain this?
AGlobal competition prevented firms passing on higher costs.
BIncreased spending on imports had lowered the exchange rate.
CThere was a low level of spare capacity in the economy.
DWage rates had increased by more than labour productivity.
✓ Correct answer
A: Global competition prevented firms passing on higher costs.
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