An economy is experiencing a deep recession with a large negative output gap. The government wishes to implement a discretionary expansionary fiscal policy to stimulate aggregate demand. Which of the following measures is an example of this?
An automatic increase in total government spending on welfare benefits as unemployment rises
A decision by the central bank to expand its asset purchase programme to lower market interest rates
A legislated reduction in the standard rate of Value Added Tax (VAT) to stimulate household consumption
A statutory increase in the national minimum wage to raise the disposable income of low-income workers
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.