A government increases its level of public spending. At the same time, the central bank reduces its main policy interest rate. All other things being equal, the most likely outcome is that
aggregate demand will fall but employment will rise.
inflation will rise but unemployment will fall.
economic growth will fall but the budget deficit will improve.
aggregate supply will fall but inflation will fall.
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.