Economics (AS & A Level) · May / June 2026 · Paper 33 · Question 23

The diagram shows an economy's production possibility curve (PPC). The government decreases income tax with the aim to increase employment without causing inflationary pressure in the economy. When is this policy likely to be most effective?

1. Amarginal propensity to consume 0.6, position X
2. Bmarginal propensity to consume 0.6, position Y
3. Cmarginal propensity to consume 0.8, position X
4. Dmarginal propensity to consume 0.8, position Y

As printed in the paper