Which one of the following policy measures would a Keynesian economist most likely advocate to address a severe, persistent negative output gap and high cyclical unemployment?
Restricting the growth of the money supply to control potential inflationary pressures.
A reduction in direct tax rates balanced by an equivalent reduction in public sector spending.
An increase in state-funded infrastructure investment funded by government borrowing.
Implementing supply-side reforms to deregulate labor markets and lower the national minimum wage.
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.