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2.3 Economic performance

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Question 80

An economy is operating with a significant negative output gap, leading to a rise in cyclical unemployment. Which combination of fiscal and monetary policy measures is most likely to reduce this type of unemployment in the short run?

A

Fiscal Policy: An increase in the government budget surplus; Monetary Policy: Central bank sale of government bonds

B

Fiscal Policy: A reduction in the government budget deficit; Monetary Policy: An increase in the commercial bank reserve requirement ratio

C

Fiscal Policy: An increase in the government budget deficit; Monetary Policy: Central bank purchase of government bonds

D

Fiscal Policy: A reduction in government transfer payments; Monetary Policy: A decrease in the central bank policy rate

Markscheme

2.3 Economic performance Questions

  1. A Level
  2. /Economics
  3. /2.3 Economic performance

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.

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