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2.3 Economic performance

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Question 105

To correct a persistent deficit on the current account of the balance of payments, a government implements a tight fiscal policy by significantly increasing income taxes and reducing public spending.

In the short run, this policy is most likely to cause a conflict between which of the following macroeconomic objectives?

A

Reducing the current account deficit and maintaining low unemployment.

B

Reducing the current account deficit and achieving price stability (low inflation).

C

Promoting economic growth and reducing the rate of unemployment.

D

Achieving price stability (low inflation) and reducing the government budget deficit.

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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