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Economics · May / June 2021 · Paper 11 · Question 17

2281Monetary policy

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

  1. AConsumers may save more.
  2. BGovernment spending may increase.
  3. CInvestment may be encouraged.
  4. DThe exchange rate may fall.

As printed in the paper

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Correct answer: A. Consumers may save more.

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