A-LevelEconomicsGovernment macroeconomic intervention9708/12 · May/June 2019 · Q191 Mark
A country has a fixed exchange rate. Which combination of problems would be most likely to cause the country's government to reduce taxation and lower interest rates?
Ademand inflation and a balance of payments current account deficit
Bdemand inflation and a low level of investments
Chigh unemployment and a balance of payments current account deficit
Dhigh unemployment and a low level of investment
✓ Correct answer
D: high unemployment and a low level of investment
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