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Economics (AS & A Level) · Oct / Nov 2021 · Paper 11 · Question 28

9708Fiscal policy

A government reduces the rate of direct income tax and devalues its currency. Which row describes the policy effects of these decisions?

  1. Afiscal policy: contractionary; monetary policy: expansionary; supply-side policy: contractionary
  2. Bfiscal policy: expansionary; monetary policy: contractionary; supply-side policy: expansionary
  3. Cfiscal policy: expansionary; monetary policy: expansionary; supply-side policy: contractionary
  4. Dfiscal policy: expansionary; monetary policy: expansionary; supply-side policy: expansionary

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Correct answer: D. fiscal policy: expansionary; monetary policy: expansionary; supply-side policy: expansionary

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