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Economics · May / June 2024 · Paper 12 · Question 18

2281Inflation

A government wishes to prevent deflation. Which combination of policies would be the most effective in achieving this aim?

  1. Ainterest rate increase, government spending increase
  2. Binterest rate increase, government spending reduce
  3. Cinterest rate reduce, government spending increase
  4. Dinterest rate reduce, government spending reduce

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Correct answer: C. interest rate reduce, government spending increase

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