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Economics (AS & A Level) · Feb / March 2021 · Paper 32 · Question 23

9708Fiscal policy

Which policy combination will reduce the level of national income by the greatest amount?

  1. Adecrease direct taxation and increase interest rates
  2. Bdecrease direct taxation and increase quantitative easing
  3. Cincrease direct taxation and increase interest rates
  4. Dincrease direct taxation and increase quantitative easing

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Correct answer: C. increase direct taxation and increase interest rates

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