A government reduces direct tax rates on low-paid work. More people enter employment and firms can fill vacancies more easily. Which chain best explains how this may improve the government's economic objectives?
Labour supply falls, output falls and unemployment rises
Labour supply rises, output falls and unemployment rises
Labour supply rises, output rises and unemployment falls
Tax rates fall, labour supply falls and inflation must rise
104 exam-style questions on AQA GCSE Economics 2.3 How the government manages the economy, covering 2.3.1a Fiscal policy and income and expenditure, 2.3.1b Fiscal policy and government objectives, 2.3.1c The government budget, 2.3.2a The meaning of monetary policy, 2.3.2b Uses of monetary policy, 2.3.3a Supply-side policies and their trade-offs, 2.3.3b Using supply-side policies, and 2.3.4 Policies to correct positive and negative externalities. Each one has a worked solution and a mark scheme showing where the marks go.