Economics (AS & A Level) · Oct / Nov 2025 · Paper 13 · Question 24

The diagram shows an economy in equilibrium with a real output of Y and a price level of P. The government aims to raise real output from Y to full employment (Y_FE) without increasing the price level in the long run. Which fiscal policy change is most likely to achieve this aim?

1. Adecreasing the rate of income tax
2. Bdecreasing spending on education
3. Cincreasing the level of sales tax
4. Dincreasing welfare benefit payments

As printed in the paper