Economics 9708 · AS & A Level · Fiscal policy

Fiscal policy — practice question

In an economy where unemployment is low, the government raises its spending. Which way of funding the extra spending is most likely to lead to inflation?

  • Aan increase in borrowing from the Central Bank
  • Ban increase in income taxes
  • Can increase in sales of state assets to the non-bank private sector
  • Dan issue of bonds to the non-bank private sector

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