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Question 19N.1.HL.TZ0.3a

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Date November 2019 Marks available [Maximum mark: 10] Reference code 19N.1.HL.TZ0.3a
Level HL Paper 1 Time zone TZ0
Command term Explain Question number a Adapted from N/A
a.
[Maximum mark: 10]
19N.1.HL.TZ0.3a
(a)

Explain the impact that a cut in taxation and an increase in government spending might have on the circular flow of income.

[10]

Markscheme

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

Answers may include:

  • definitions of the circular flow of income (model), (indirect/direct) taxation, government spending
  • diagram of the circular flow of income showing injections and leakages
  • explanation of the impact a cut in taxation and an increase in government spending will have on the circular flow of income, with leakages being reduced and injections being increased, resulting in an increased (flow of) income, ceteris paribus
  • example(s) of expansionary fiscal policy in practice.

Award a maximum of level 2 marks if a candidate only refers to either a cut in taxation or an increase in government spending (but not both).

Syllabus sections