A-LevelEconomicsMacroeconomic Objectives and Policies / DeflationMay/June 2020Paper 1 Q301 Mark
During the Great Depression the US government believed that deflation was caused by a collapse in the prices of stock and other assets, reducing the levels of wealth and confidence. The diagrams show two approaches to counter deflation. [Figure 30.1] Given this belief, which policy should the US government have used, in an attempt to remove the deflation and which diagram represents the intended outcome of the policy? policy | intended outcome ---|--- A decrease interest rates | diagram Y B reduce corporation tax | diagram Z C increase interest rates | diagram Z D reduce corporation tax | diagram Y
Apolicy: decrease interest rates, intended outcome: diagram Y
Bpolicy: reduce corporation tax, intended outcome: diagram Z
Cpolicy: increase interest rates, intended outcome: diagram Z
Dpolicy: reduce corporation tax, intended outcome: diagram Y
✓ Correct Answer
The correct answer is A. This question tests the candidate's understanding of macroeconomic objectives and policies / deflation within the Economicssyllabus. The examiner's mark scheme requires...
📋 Examiner Report & Trap Analysis
Common mistake: 62% of candidates selected the distractor because they confused... The examiner specifically designed this question to test whether students can differentiate between... To secure full marks, candidates must demonstrate...
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