A-LevelEconomicsMacroeconomic Policy (Monetary Policy)Oct/Nov 2025Paper 1 Q231 Mark
A country has a target rate of inflation of 2.5% and has recently experienced the actual rate rising to 6%, with unemployment falling to very low levels. Which policy option is most likely to be implemented?
Aan increase in government expenditure on training
Ban increase in indirect taxes on demerit goods
Can increase in import tariffs
Dan increase in interest rates
✓ Correct Answer
The correct answer is D: an increase in interest rates
📋 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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