Economics 9708 · AS & A Level · Fiscal policy

Fiscal policy — practice question

In a closed economy, which mix of fiscal and monetary policies is most likely to work effectively in the short run to stop deflation?

  • Adecreasing the budget deficit; decreasing the interest rate
  • Bdecreasing the budget deficit; decreasing the money supply
  • Cincreasing the budget deficit; decreasing the interest rate
  • Dincreasing the budget deficit; decreasing the money supply

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