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Economic management — Question 7

QCAA 2022, Paper 1 · 1 mark

Q7 · 2022 · External assessmentUnclassified1 mark

QUESTION 7

Australia’s monetary policy is less effective when the economy is

(A) recovering, because excess production capacity limits employment growth.

(B) in a trough, because the average propensity to save is high due to lower consumer confidence.

(C) in a downturn, because political considerations discourage potential reductions in the cash rate.

(D) booming, because businesses are concerned that interest rates will rise so they reduce their investments.

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