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2.5 Fiscal policy and supply-side policies

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Question 51

Confronting a Downturn

Extract C

"While raising interest rates is a standard response to curb inflation, there is a significant risk of over-tightening. Aggressive monetary contraction risks choking off aggregate demand, reducing business investment, and ultimately pushing the economy into a deep recession. Recovery from such a downturn will require swift policy intervention, though there is active debate over whether demand-side stimulus or structural supply-side reforms offer the most sustainable path back to growth."

Extract C states: 'Recovery from such a downturn will require swift policy intervention...'

Using the extract and your knowledge of economics, evaluate policies that could be used to stimulate recovery in an economy experiencing a deep recession.

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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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