Economics (AS & A Level) · Oct / Nov 2022 · Paper 12 · Question 30

The diagram shows four possible aggregate supply curves and an equilibrium point X. A government employs deflationary fiscal policy in order to reduce the rate of inflation in its economy. This shifts aggregate demand to AD2. With which AS curve would this policy be most effective?

1. AA
2. BB
3. CC
4. DD

As printed in the paper