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O Levels Economics (2281)•2281/12/O/N/23
Question 17 from 2281/12/O/N/23

Explanation

Identifying Macroeconomic Policy Steps:

  • Define macroeconomic policy as government actions affecting the entire economy, like inflation, growth, and employment via fiscal or monetary tools.
  • Assess each option: Macro policies target aggregates, not specific sectors or goods.
  • Eliminate microeconomic options that focus on individual markets or industries.
  • Select the option involving broad monetary control.

Why C is correct:

  • Increasing the money supply is monetary policy, a core macroeconomic tool used by central banks to influence overall inflation, interest rates, and economic activity (per quantity theory of money: MV = PQ).

Why the others are wrong:

  • A: Targets only the food industry, a microeconomic intervention in a specific sector.
  • B: Addresses market structure for one firm, a microeconomic antitrust measure.
  • D: Applies to a single commodity (wheat), a microeconomic price control.

Final answer: C

Topic: Monetary policy

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