Economics 9708 · AS & A Level · Fiscal policy

Fiscal policy — practice question

A government introduces a more expansionary fiscal policy together with a more deflationary monetary policy. Which combination of policy instrument changes would match this?

  • Agovernment expenditure: decrease; taxation: decrease; interest rate: decrease
  • Bgovernment expenditure: decrease; taxation: increase; interest rate: decrease
  • Cgovernment expenditure: increase; taxation: decrease; interest rate: increase
  • Dgovernment expenditure: increase; taxation: increase; interest rate: increase

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