Economics (AS & A Level) · Oct / Nov 2024 · Paper 11 · Question 23

The central bank of a country raises interest rates to reduce the general price level. When is this policy likely to have the biggest impact? | | position of the economy on its production possibility curve (PPC) diagram | responsiveness of aggregate demand to interest rate changes | |---|---|---| | A | below the PPC | high | | B | below the PPC | low | | C | on the PPC | high | | D | on the PPC | low |

1. Abelow the PPC, high
2. Bbelow the PPC, low
3. Con the PPC, high
4. Don the PPC, low

As printed in the paper