Economic forecasters predict that the negative output gap in Sweden is likely to widen over the next two years.
In the short run, which one of the following policy developments is most likely to help prevent this negative output gap from increasing?
The Riksbank (central bank) raising its main policy interest rate
Government intervention designed to appreciate the exchange rate of the Swedish krona
A reduction in direct taxation financed by an increase in the national budget deficit
The introduction of long-term structural reforms aimed at increasing labour market flexibility
245 exam-style questions on AQA A Level Economics 2.5 Fiscal policy and supply-side policies, covering 2.5.1 Fiscal policy and 2.5.2 Supply-side policies. Each one has a worked solution and a mark scheme showing where the marks go.