Economics 0455 · IGCSE · Fiscal policy

Fiscal policy — practice question

During 2013, a government aimed to keep inflation low and to reduce unemployment as well. It chose to subsidise consumers who wanted to buy a house so that houses would become more affordable for them. At the same time, there was a shortage of houses. What is most likely to have happened to inflation, housebuilding and unemployment?

  • Ainflation: fall; housebuilding: no change; unemployment: fall
  • Binflation: fall; housebuilding: rise; unemployment: rise
  • Cinflation: rise; housebuilding: no change; unemployment: rise
  • Dinflation: rise; housebuilding: rise; unemployment: fall

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