A-LevelEconomicsMacroeconomic Policy (Fiscal Policy)Oct/Nov 2025Paper 1 Q161 Mark
The diagram shows the AD and AS curves for a country. The equilibrium level of national income is Y₁ and the general price level is P₁. [Figure 16.1] What is the most likely effect on employment and the general price level of a small decrease in government expenditure?
Aemployment: falls, general price level: falls
Bemployment: falls, general price level: unchanged
Cemployment: unchanged, general price level: falls
Demployment: unchanged, general price level: unchanged
✓ Correct Answer
The correct answer is C. This question tests the candidate's understanding of macroeconomic policy (fiscal policy) 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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