Economics Multiple Choice Question – 23 September 2021

A country has a fixed exchange rate.

Which combination of problems would be most likely to cause the country’s government to reduce taxation and lower interest rates?

Select ONE answer:

1. demand inflation and a balance of payments current account deficit
2. demand inflation and a low level of investments
3. high unemployment and a balance of payments current account deficit
4. high unemployment and a low level of investment

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Economics KS4 and KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct

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