Day: July 3, 2025

Accounting Multiple Choice Question – 3 July 2025

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

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The government may seek to reduce the rate of demand-pull inflation by any of the following means except?

Select ONE answer:

  1. Reducing interest rates
  2. Increasing VAT
  3. Applying more stringent controls over bank lending
  4. Reducing public expenditure

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

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

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

  1. Correct == > Public expenditure represents the government’s own demand. Bank lending is largely used for spending on goods and services by the people who borrow the money. Higher VAT could increase total spending on goods and services inclusive of the tax, but spending net of tax will fall, and this should result in a reduction in demand-pull inflation. Lower interest rates is likely to result in higher consumer borrowing and even stronger demand-pull inflation.
  2. Not correct
  3. Not correct
  4. Not correct

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