A-LevelEconomicsGovernment macroeconomic intervention9708/12 · Oct/Nov 2020 · Q191 Mark
Under which combination of circumstances will a policy of increasing the money supply be most effective at moving an economy out of recession?
Acircumstance one: depreciating exchange rate, circumstance two: global financial crisis
Bcircumstance one: high nominal interest rates, circumstance two: appreciating exchange rate
Ccircumstance one: low aggregate demand, circumstance two: inflation rate above the target level
Dcircumstance one: low nominal interest rates, circumstance two: no spare capacity available
✓ Correct answer
B: circumstance one: high nominal interest rates, circumstance two: appreciating exchange rate
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