A-LevelEconomicsGovernment macroeconomic intervention9708/12 · May/June 2017 · Q301 Mark
An economy is currently operating close to its full employment level of national income. Which combination of macro-economic policies would be most likely to have net deflationary effects?
A10% cut in the standard rate of income tax and a 5% devaluation of the currency
B10% cut in the standard rate of income tax and a 5% revaluation of the currency
C10% rise in the standard rate of income tax and a 5% devaluation of the currency
D10% rise in the standard rate of income tax and a 5% revaluation of the currency
✓ Correct answer
D: 10% rise in the standard rate of income tax and a 5% revaluation of the currency
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