Question 19M.3.HL.TZ0.j
| Date | May 2019 | Marks available | [Maximum mark: 2] | Reference code | 19M.3.HL.TZ0.j |
| Level | HL | Paper | 3 | Time zone | TZ0 |
| Command term | Calculate | Question number | j | 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
Government economists have estimated that citizens of Fairland spend 10 % of any additional income on imported goods and pay a tax rate of 20 % on every extra dollar of income. The marginal propensity to save for Fairland’s citizens is 10 %.
Using your answer to part (i), calculate the increase in government spending necessary to increase nominal GDP by $100 billion.
[2]
Change in government spending =
Any valid working is sufficient for [1].
= $40 billion
An answer of 40 billion or 40 or $40 billion without any working is sufficient for [1].
OFR applies.
Well-answered, with a number of candidates benefitting from the own-figure rule from part (i)
