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Economics (AS & A Level) · May / June 2025 · Paper 13 · Question 25

9708Monetary policy

A government has a target to reduce the rate of inflation. Why might it not want to raise interest rates to achieve this target?

  1. Aaggregate demand may fall
  2. Baggregate supply may fall
  3. Csaving may fall
  4. Dthe exchange rate may fall

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Correct answer: B. aggregate supply may fall

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