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2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts

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Question 101

An economy is experiencing a period of low economic growth and high unemployment. To stimulate aggregate demand (ADADAD) and boost the level of national employment, which of the following combinations of changes would be most effective, assuming all other things remain equal?

A

An appreciation of the exchange rate alongside an increase in government capital expenditure

B

An increase in the base rate of interest alongside a reduction in the rate of income tax

C

A reduction in the marginal propensity to save alongside a rise in business investment

D

A reduction in the budget deficit alongside an increase in the marginal propensity to import

Markscheme

2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts Questions

  1. A Level
  2. /Economics
  3. /2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts

222 exam-style questions on AQA A Level Economics 2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts, covering 2.2.1 The circular flow of income, 2.2.2 Aggregate demand and aggregate supply analysis, 2.2.3 The determinants of aggregate demand, 2.2.4 Aggregate demand and the level of economic activity, 2.2.5 Determinants of short-run aggregate supply, and 2.2.6 Determinants of long-run aggregate supply. Each one has a worked solution and a mark scheme showing where the marks go.

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