Economics 2281 · O Level · Fiscal policy

Fiscal policy — practice question

During 2013, a government aimed to hold inflation down while also reducing unemployment. It chose to subsidise consumers who wanted to buy a house, so that houses would be more affordable for them. At that 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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