Day: May 18, 2023

An economy has a low level of unemployment. The government increases its expenditure.

Which method of financing the additional expenditure is most likely to cause inflation?

Select ONE answer:

1. an increase in borrowing from the Central Bank
2. an increase in income taxes
3. an increase in sales of state assets to the non-bank public
4. an issue of bonds to the non-bank public

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 1

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

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