A-LevelEconomicsGovernment macroeconomic intervention9708/12 · Feb/Mar 2022 · Q221 Mark
From the initial position of equilibrium shown, there is an increase in government expenditure on goods and services and simultaneously an increase in the costs of production of goods and services. What best describes the likely impact on the economy? [Figure 22]
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Aequilibrium level of national income: falls, equilibrium level of prices: uncertain
Bequilibrium level of national income: no change, equilibrium level of prices: no change
Cequilibrium level of national income: rises, equilibrium level of prices: rises
Dequilibrium level of national income: uncertain, equilibrium level of prices: rises
✓ Correct answer
D: equilibrium level of national income: uncertain, equilibrium level of prices: rises
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