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2.5 Fiscal policy and supply-side policies

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Question 89

To curb high inflation caused by excess aggregate demand, a government decides to implement a discretionary contractionary fiscal policy. Which of the following combinations correctly identifies a suitable fiscal policy action and its direct impact on the government's budget balance?

A

Policy Action: An increase in public sector capital expenditure; Direct Impact: Moves the budget balance towards a deficit

B

Policy Action: A reduction in the rate of national insurance contributions; Direct Impact: Moves the budget balance towards a surplus

C

Policy Action: An increase in the rates of personal income tax; Direct Impact: Moves the budget balance towards a surplus

D

Policy Action: A reduction in welfare benefits; Direct Impact: Moves the budget balance towards a deficit

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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