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Date November 2019 Marks available 15 Reference code 19N.1.SL.TZ0.3
Level Standard level Paper Paper 1 Time zone Time zone 0
Command term Evaluate 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 » 2.3 Macroeconomic objectives » Economic growth » Consequences of economic growth
Last exams 2021 » Section 2: Macroeconomics » 2.5 Monetary policy » The role of monetary policy » Evaluation of monetary policy
Last exams 2021 » Section 2: Macroeconomics » 2.5 Monetary policy » The role of monetary policy
Last exams 2021 » Section 2: Macroeconomics » 2.3 Macroeconomic objectives » Economic growth
First exams 2022 » Unit 3: Macroeconomics » 3.5 Demand management (demand side policies)—monetary policy » 3.5.8 Effectiveness of monetary policy
Last exams 2021 » Section 2: Macroeconomics » 2.3 Macroeconomic objectives
Last exams 2021 » Section 2: Macroeconomics » 2.5 Monetary policy
First exams 2022 » Unit 3: Macroeconomics » 3.5 Demand management (demand side policies)—monetary policy
Last exams 2021 » Section 2: Macroeconomics
First exams 2022 » Unit 3: Macroeconomics
First exams 2022
Last exams 2021

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