Economics 9708 · AS & A Level · Government macroeconomic policy objectives

Government macroeconomic policy objectives — practice question

A country has an inflation target of 2.5% and has recently seen the actual inflation rate increase to 6%, while unemployment has dropped to very low levels. Which policy option is most likely to be used?

  • Aan increase in government expenditure on training
  • Ban increase in indirect taxes on demerit goods
  • Can increase in import tariffs
  • Dan increase in interest rates

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