O-LevelEconomicsGovernment and the macroeconomy2281/12 · May/June 2022 · Q221 Mark
A country wishes to reduce the level of inflation. Which combination of policy measures will be most successful? [Table]
This question uses a diagram from the original paper, which isn't shown here. Open the full paper from the past papers archive to see it.
Adecrease exchange rates increase interest rates
Bdecrease interest rates increase exchange rates
Cincrease government spending decrease interest rates
Dincrease interest rates decrease government spending
✓ Correct answer
D: increase interest rates decrease government spending
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