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2.5 Fiscal policy and supply-side policies

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Question 76

An economy is currently experiencing a severe economic recession, with unemployment rising to 9.5%. Which of the following combinations of monetary and fiscal policy is most likely to stimulate economic growth and reduce high unemployment?

Central bank interest ratesGovernment spendingDirect tax rates
ADecreaseIncreaseDecrease
BIncreaseDecreaseIncrease
CDecreaseDecreaseIncrease
DIncreaseIncreaseDecrease
A

Decrease central bank interest rates, increase government spending, and decrease direct tax rates

B

Increase central bank interest rates, decrease government spending, and increase direct tax rates

C

Decrease central bank interest rates, decrease government spending, and increase direct tax rates

D

Increase central bank interest rates, increase government spending, and decrease direct tax rates

Markscheme

2.5 Fiscal policy and supply-side policies Questions

  1. A Level
  2. /Economics
  3. /2.5 Fiscal policy and supply-side policies

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.

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