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Economics (AS & A Level) · May / June 2025 · Paper 31 · Question 19

9708Monetary policy

A country's government decides to set artificially low interest rates. What describes a negative consequence to this country of this policy?

  1. Aa higher rate of consumer price inflation
  2. Ba rapid growth in gross domestic product
  3. Can increase in investment by manufacturers and real estate developers
  4. Da reduction in borrowing by consumers

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Correct answer: A. a higher rate of consumer price inflation

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