Economics (AS & A Level) · May / June 2021 · Paper 13 · Question 29
9708Price stability
Deflation is associated with persistent falling price levels. Which government policy would be most effective to prevent deflation?
- Aimposing maximum price levels on basic foodstuffs
- Bimproving consumer confidence by reducing sales taxes
- Cincreasing income tax rates and increasing government borrowing
- Dremoving economic uncertainty and encouraging business investment
As printed in the paper
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Correct answer: D. removing economic uncertainty and encouraging business investment
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