Economics 9708 · AS & A Level · Monetary policy

Monetary policy — practice question

A country is experiencing severe deflation. What is most likely to stop the deflation from getting worse?

  • Aincreasing income tax to help reduce the government’s budget deficit
  • Bincreasing interest rates to encourage more saving
  • Cincreasing transfer payments to reduce inequality of income
  • Drevaluing the currency to bring in more revenue from exports

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