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2.5 Fiscal policy and supply-side policies

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Question 22

The table below shows selected fiscal data for a hypothetical economy between 2019 and 2023:

Table: National Debt and GDP

YearNational Debt ($bn)Gross Domestic Product (GDP) ($bn)
20191,2001,600
20231,7101,800

Which of the following is most likely to assist the government in managing and reducing the burden of the national debt relative to GDP over the subsequent years?

A

A decision by the central bank to sharply increase domestic interest rates to combat inflation

B

A sustained period where the nominal GDP growth rate exceeds the average nominal interest rate on government debt

C

A credit rating downgrade of the sovereign debt by major international rating agencies

D

A depreciation of the domestic currency, where a significant portion of the national debt is denominated in foreign currencies

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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