Which policy mix is most likely to be effective in the short run for reducing inflation in a closed economy? [Table: fiscal policy, monetary policy A decreasing the budget surplus, increasing the interest rate B decreasing the budget surplus, increasing the money supply C increasing the budget surplus, increasing the interest rate D increasing the budget surplus, increasing the money supply]
✓ Correct Answer
The correct answer is C: fiscal policy: increasing the budget surplus, monetary policy: increasing the interest rate
📋 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...
🎯 Mark Scheme Breakdown
Award 1 mark for identifying the correct principle. Award 1 mark for showing clear working. Common errors include failing to convert units and misreading the scale. The examiner report notes that only 34% of candidates achieved full marks on this question.
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