DP Economics
Question 19N.1.SL.TZ0.a
| Date | November 2019 | Marks available | [Maximum mark: 10] | Reference code | 19N.1.SL.TZ0.a |
| Level | SL | Paper | 1 | Time zone | TZ0 |
| Command term | Explain | Question number | a | Adapted from | N/A |
a.
[Maximum mark: 10]
19N.1.SL.TZ0.a
Explain why a reduction in interest rates might lead to an increase in aggregate demand.
[10]
Markscheme
Marks should be allocated according to the paper 1 markbands for May 2013 forward, part A.
Answers may include:
- definitions of aggregate demand, interest rates
- diagram to show how a reduction in interest rates increases aggregate demand
- explanation that a reduction in interest rates increases consumption and investment, leading to an increase in aggregate demand
- examples of how a reduction in interest rates increases aggregate demand in practice and/or of countries where reduced interest rates have increased aggregate demand.
