CAIE A-Level Economics 10.3.2 Policy Problems and Conflicts

CAIE A-Level Economics 10.3.2 Policy Problems and Conflicts
Cambridge International AS & A Level Economics 9708 syllabus for exams in 2026, 2027 and 20282026–2028

Practise tracing crowding out and conflicting policy effects when action on demand, inflation or external balance changes private investment, unemployment or another…

How this is tested

  • explain crowding out when government borrowing raises interest rates or absorbs private finance
  • trace expansionary fiscal or monetary policy to deflation relief but greater import demand
  • evaluate temporary price control or mixed policy when inflation expectations conflict with market reform

Question 23

[Maximum number: 1]

Increased borrowing by the government results in higher interest charges and this leads to less private investment expenditure.

Of what is this an example?

A

an automatic stabiliser

B

crowding out

C

the accelerator

D

the substitution effect