A-LevelEconomicsGovernment macroeconomic intervention9708/12 · Oct/Nov 2025 · 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?
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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
C: employment: unchanged, general price level: falls
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