The Organisation for Economic Co-operation and Development (OECD) summary forecast for the UK states that above-target inﬂation will hold back private consumption and public spending. Given this information, which of the following is likely to be true for the UK economy?
A) The government is likely to buy more hospitals and schools and employ nurses and teachers in the near future.
B) Interest rates in the UK need to be reduced in order to increase private consumption.
C) The aggregate supply curve in the economy is likely to be vertical.
D) The UK economy is likely to move to an inﬂationary recession.

Question

Quizplus · Accepted Answer

The forecast of above-target inflation holding back private consumption and public spending suggests that the economy may face stagnation or recessionary pressures alongside high inflation, which is indicative of an inflationary recession.

The Organisation for Economic Co-Operation and Development (OECD) Summary Forecast