Economics (AS & A Level) · May / June 2021 · Paper 33 · Question 23

A government is committed to increasing real GDP using only fiscal and monetary policies. Which combination of measures is likely to be the most effective in achieving this aim?

1. Aincrease in the budget deficit; central bank buys back government bonds
2. Bincreased government spending on roads; increased short term rate of interest
3. Creduce income taxes; central bank sells more government bonds
4. Dreduce wealth taxes; increase commercial banks' cash deposit ratio

As printed in the paper