An economy is experiencing a significant trade deficit alongside rising demand-pull inflation. All other things being equal, which policy measure is most likely to reduce both the trade deficit and the rate of inflation?
An increase in the standard rate of income tax
A reduction in the central bank's base interest rate
An increase in government spending on welfare benefits
A devaluation of the country's exchange rate
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.