O-LevelEconomicsGovernment and the macroeconomy2281/12 · Oct/Nov 2020 · Q211 Mark
The table shows the rates of unemployment and real GDP growth for an economy in 2014 and 2018. 2014 2018 rate of unemployment (%) 3 10 rate of real GDP growth (%) 4 -2 Which combination of policy measures would be most effective in returning the economy to the 2014 level of economic activity?
Adecrease in direct taxes and an increase in the rate of interest
Bdecrease in government expenditure and an increase in the rate of interest
Can increase in direct taxes and a decrease in the rate of interest
Dan increase in government expenditure and a decrease in the rate of interest
✓ Correct answer
D: an increase in government expenditure and a decrease in the rate of interest
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