A-LevelEconomicsGovernment macroeconomic intervention9708/12 · Feb/Mar 2025 · Q181 Mark
The diagram shows aggregate demand (AD) and long-run aggregate supply (LRAS) with X as the initial equilibrium. [Figure showing LRAS, LRAS1, AD, AD1, AD2 curves, with points F, G, X, H, J, and labels for price level and real GDP] Which combination of policy and new final equilibrium point is correct? policy new final equilibrium point
This question uses a diagram from the original paper, which isn't shown here. Open the full paper from the past papers archive to see it.
Aincreased direct taxation F
Bincreased government spending on infrastructure G
Cappreciation of the exchange rates H
Ddecreased interest rates J
✓ Correct answer
B: increased government spending on infrastructure G
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