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Date November 2019 Marks available 10 Reference code 19N.1.SL.TZ0.3
Level Standard level Paper Paper 1 Time zone Time zone 0
Command term Explain Question number 3 Adapted from N/A

Question

Explain why a reduction in interest rates might lead to an increase in aggregate demand.

[10]
a.

Evaluate the view that expansionary monetary policy is the most effective way to achieve economic growth.

[15]
b.

Markscheme

Marks should be allocated according to the paper 1 markbands for May 2013 forward, part A.

Answers may include:

a.

Marks should be allocated according to the paper 1 markbands for May 2013 forward, part B.

Answers may include:

Evaluation may include: consideration of the problems of expansionary monetary policy, such as inflation, that consumption and investment may not increase if business and consumer confidence are low, and the time lags associated with interest rate changes. Responses could also cover alternative policies to achieve economic growth, such as fiscal policy or supply-side policy.

b.

Examiners report

[N/A]
a.
[N/A]
b.

Syllabus sections

Last exams 2021 » Section 2: Macroeconomics » 2.2 Aggregate demand and aggregate supply » Aggregate demand (AD) » The determinants of AD or causes of shifts in the AD curve
Last exams 2021 » Section 2: Macroeconomics » 2.2 Aggregate demand and aggregate supply » Aggregate demand (AD)
First exams 2022 » Unit 3: Macroeconomics » 3.2 Variations in economic activity—aggregate demand and aggregate supply » 3.2.3 Determinants of AD components
Last exams 2021 » Section 2: Macroeconomics » 2.2 Aggregate demand and aggregate supply
First exams 2022 » Unit 3: Macroeconomics » 3.2 Variations in economic activity—aggregate demand and aggregate supply
Last exams 2021 » Section 2: Macroeconomics
First exams 2022 » Unit 3: Macroeconomics
First exams 2022
Last exams 2021

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