A-LevelEconomicsGovernment macroeconomic intervention9708/33 · Oct/Nov 2018 · Q251 Mark

The central bank in an open economy cuts the interest rate to avoid deflation. Under which conditions is this expansionary monetary policy most likely to be effective? | | asset prices | consumption spending | |---|---|---| | A | rise rapidly | interest elastic | | B | rise rapidly | interest inelastic | | C | rise slowly | interest elastic | | D | rise slowly | interest inelastic |

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2018). The mark or mark type is shown in brackets.

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Topic: Government macroeconomic intervention, A-Level Economics (syllabus 9708). Structured question, 1 mark.
Source: A-Level Economics, Oct/Nov 2018 Paper 3 Variant 3, question 25.

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