9708/22/O/N/13
4 (a) Explain, with the help of a diagram, how a policy of expenditure
dampening in an economy would affect aggregate demand, prices and output
in that economy.
Expenditure dampening policy is designed to reduce imports and increase exports by
reducing demand. It’s used by the government to reduce a total amount of spending in an
economy. Fiscal policy and monetary policy are useful for expenditure dampening
