Economics (AS & A Level) · Oct / Nov 2022 · Paper 13 · Question 29

A country is currently experiencing deflation. It has a large national debt that is greater than its annual real income. Which combination of policies is most likely to increase the general price level without adding to the national debt?

1. Adecrease the budget deficit; decrease the money supply
2. Bdecrease the budget deficit; increase the money supply
3. Cincrease the budget deficit; decrease the money supply
4. Dincrease the budget deficit; increase the money supply

As printed in the paper