An economy is experiencing a deep recession with a significant negative output gap. Which of the following policies represents a discretionary expansionary fiscal policy action to stimulate aggregate demand?
An automatic rise in total government expenditure on welfare benefits as unemployment increases
A deliberate reduction in the rate of corporation tax alongside an increase in government capital spending on healthcare
A reduction in the commercial bank reserve requirements set by the central bank
An increase in the personal income tax allowance accompanied by a reduction in state pension payments
68 exam-style questions on OCR A Level Economics Fiscal policy. Each one has a worked solution and a mark scheme showing where the marks go.