Economics 0455 · IGCSE · The macroeconomic aims of government

The macroeconomic aims of government — practice question

The table gives the unemployment rate and real GDP growth rate for an economy in 2014 and 2018. Which combination of policy measures would be the most effective in restoring the economy to the 2014 level of economic activity?

  • Aa decrease in direct taxes and an increase in the rate of interest
  • Ba decrease in government expenditure and an increase in the rate of interest
  • Can increase in direct taxes and a decrease in the rate of interest
  • Dan increase in government expenditure and a decrease in the rate of interest

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