CAIE A-Level Economics 10.3.1 Policy Effectiveness

CAIE A-Level Economics 10.3.1 Policy Effectiveness
Cambridge International AS & A Level Economics 9708 syllabus for exams in 2026, 2027 and 20282026–2028

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

How this is tested

  • identify the underlying demand, supply or external cause before choosing the policy instrument
  • draw the relevant AD/AS, Laffer, currency or trade effect and trace it to the target
  • evaluate strength through elasticities, multiplier, time lags, expectations and side effects

Question 25

[Maximum number: 1]

What does the Laffer curve show?

A

the amount of tax revenue received at each tax rate

B

the impact on the distribution of income after tax rates rise

C

the rise in inflation following a fall in unemployment due to a cut in income tax

D

the rise in poverty due to a rise in the basic rate of income tax