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Question 21M.1.SL.TZ2.3a

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Date May 2021 Marks available [Maximum mark: 10] Reference code 21M.1.SL.TZ2.3a
Level SL Paper 1 Time zone TZ2
Command term Explain Question number a Adapted from N/A
a.
[Maximum mark: 10]
21M.1.SL.TZ2.3a
(a)

Explain why cyclical (demand-deficient) unemployment may occur in an economy.

[10]

Markscheme

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

Answers may include:

  • definition of unemployment, cyclical (demand-deficient) unemployment
  • diagram to show cyclical (demand-deficient) unemployment 
  • explanation of how cyclical (demand-deficient) unemployment is caused by a fall in AD, which may arise from a fall in any or all of the components of AD (C + I + G + X − M)
  • examples of cyclical (demand-deficient) unemployment occurring in practice.
Examiners report

There were some very strong answers to this question, with many students explaining how cyclical unemployment occurs during a recession when aggregate demand falls, and unemployment rises. These answers were effectively illustrated with aggregate demand and supply diagrams. Real-world examples often prove more difficult for students in macroeconomic questions, but there were still some effective examples from different countries where unemployment has increased because the current pandemic (at the time of writing) caused recession and a fall in aggregate demand. 

Syllabus sections