An economy is currently experiencing an inflation rate of 12%, which is well above its official target. Which combination of changes in monetary policy and fiscal policy is most likely to help bring the rate of inflation back down towards its target?
| Interest rates | Government expenditure | Taxation revenue | |
|---|---|---|---|
| A | Decrease | Increase | Decrease |
| B | Increase | Decrease | Increase |
| C | Decrease | Decrease | Increase |
| D | Increase | Increase | Decrease |
A
B
C
D
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.