O-LevelEconomicsGovernment and the macroeconomy2281/11 · May/June 2021 · Q171 Mark

Interest rates are sometimes raised to control inflation. Why might this policy be effective?

AConsumers may save more.

BGovernment spending may increase.

CInvestment may be encouraged.

DThe exchange rate may fall.

✓ Correct answer

A: Consumers may save more.

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About this question

Topic: Government and the macroeconomy, O-Level Economics (syllabus 2281). Multiple choice, 1 mark.
Source: O-Level Economics, May/June 2021 Paper 1 Variant 1, question 17.

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