CAIE A-Level Economics A2 10.3.1 Policy Effectiveness Questions

Practise selecting and evaluating fiscal, monetary, supply-side, exchange-rate or trade policy for stated macroeconomic conditions using evidence.

Exam points

Select and evaluate fiscal, monetary, supply-side, exchange-rate or trade policies for stated macroeconomic conditions using evidence and transmission chains.

[Maximum number: 1]

An economy has a sudden increase in inflation caused by a large rise in energy prices. It also enters a recession with rising unemployment.

A decrease in which policy variable is most likely to reduce the impact of the recession without increasing the price level further?

direct taxation

government spending

indirect taxation

interest rate

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CAIE A-Level Economics A2 10.3.1 Policy Effectiveness Questions question 1