Question 19M.3.HL.TZ0.3f
| Date | May 2019 | Marks available | [Maximum mark: 4] | Reference code | 19M.3.HL.TZ0.3f |
| Level | HL | Paper | 3 | Time zone | TZ0 |
| Command term | Explain | Question number | f | Adapted from | N/A |
Table 1 provides information about Fairland.
Table 1
Figure 6 illustrates Fairland’s demand (D) for and supply (S) of low-wage labour.
Figure 6
In order to raise the living standards of low-wage workers, the government of Fairland has decided to impose a minimum wage of $10 per hour.
The marginal rates of income tax in Fairland are given in Table 2.
Table 2
Using an AD/AS diagram to support your answer, explain the mechanism through which monetary policy can help an economy reduce the level of unemployment.
[4]
Any form of aggregate supply curve (SRAS, LRAS or Keynesian AS) is acceptable.
Candidates who incorrectly label diagrams can receive a maximum of [3].
For AD/AS, the vertical axis may be price level or average price level. The horizontal axis may be output, real output, national output, real national output, national income, or GDP. A title is not necessary.
Any other reasonable response should be rewarded. For example, a diagram showing the labour market, with axes labelled “wage rate” and “employment” or “quantity of labour”, with accurate explanation may be fully rewarded.
This question was answered very well, reflecting the ability of candidates to explain how expansionary monetary policy works with use of a diagram. A small number of candidates neglected to refer to interest rates or components of aggregate demand.
