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A-LevelEconomicsGovernment macroeconomic intervention9708/12 · Feb/Mar 2025 · Q241 Mark

A government decides to use supply-side policy to increase long-run aggregate supply (LRAS). What is the most likely reason why this policy tool will not lead to a fall in the price level?

AAggregate demand will also increase.
BLabour productivity levels will increase.
CWorkers will save any extra wages they earn.
DWorkers will spend any extra wages on imports.

✓ Correct answer

A: Aggregate demand will also increase.

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About this question

Topic
Government macroeconomic intervention, A-Level Economics (syllabus 9708). Multiple choice, 1 mark.
Source
A-Level Economics, Feb/Mar 2025 Paper 1 Variant 2, question 24.

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