An economy is experiencing a significant negative output gap, resulting in high cyclical unemployment, alongside a substantial and persistent current account surplus on its balance of payments. Which of the following policy measures is most likely to reduce both the rate of unemployment and the size of the current account surplus?
An appreciation of the domestic currency
An increase in the central bank's base interest rate
A reduction in the standard rate of value-added tax (VAT)
An increase in the rate of corporation tax
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.