An economy is experiencing stagnant productivity growth alongside rising demand-deficient (cyclical) unemployment. All other things being equal, which combination of policies is most likely to both stimulate productivity growth and reduce cyclical unemployment?
An increase in the central bank policy interest rate and higher government spending on public infrastructure.
Increased government subsidies for business research and development (R&D) and a reduction in personal income tax rates.
An increase in national sales tax (VAT) to reduce the budget deficit and deregulating labor markets.
A reduction in import tariffs paired with a targeted budget surplus.
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.