An economy is experiencing rapid demand-pull inflation alongside a widening deficit on the current account of its balance of payments.
Which one of the following policy measures is most likely to both reduce aggregate demand and improve the current account balance?
An increase in personal income tax rates
A reduction in the central bank's base interest rate
An increase in government capital expenditure on infrastructure
A reduction in tariffs on all imported consumer goods
327 exam-style questions on AQA A Level Economics 2.3 Economic performance, covering 2.3.1 Economic growth and the economic cycle, 2.3.2 Employment and unemployment, 2.3.3 Inflation and deflation, and 2.3.4 Possible conflicts between macroeconomic policy objectives. Each one has a worked solution and a mark scheme showing where the marks go.