Economics 2281 · O Level · Fiscal policy

Fiscal policy — practice question

The table presents the unemployment rate and real GDP growth for an economy in 2014 and 2018. Which mix of policy measures would be most effective in bringing the economy back 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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