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Economics (AS & A Level) · Oct / Nov 2022 · Paper 32 · Question 27

9708Fiscal policy

Under which circumstances will the future burden of the national debt on a country increase the most?

  1. Aincrease in the budget deficit +2% of GDP, change in GDP +4%, price of government bonds decreasing
  2. Bincrease in the budget deficit +2% of GDP, change in GDP +4%, price of government bonds increasing
  3. Cincrease in the budget deficit +4% of GDP, change in GDP +2%, price of government bonds decreasing
  4. Dincrease in the budget deficit +4% of GDP, change in GDP +2%, price of government bonds increasing

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Correct answer: C. increase in the budget deficit +4% of GDP, change in GDP +2%, price of government bonds decreasing

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