An economy is experiencing a widening negative output gap and a decline in business investment. Which of the following policies would be the most appropriate course of action to remedy this situation?
An increase in:
the base interest rate to encourage capital investment
the government budget surplus to improve business confidence
value-added tax (VAT) to stimulate consumer spending
government expenditure on infrastructure to boost aggregate demand
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.