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Question SPM.1.SL.TZ0.2b

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Date May specimen first teaching 2021 Marks available [Maximum mark: 15] Reference code SPM.1.SL.TZ0.2b
Level SL Paper 1 Time zone TZ0
Command term Evaluate Question number b Adapted from N/A
b.
[Maximum mark: 15]
SPM.1.SL.TZ0.2b
(b)

Using real-world examples, evaluate the effectiveness of monetary policy to achieve low inflation.

[15]

Markscheme

Answers may include:

  • Definition: inflation, monetary policy.
  • Explanation: that it is incremental, easily changed, flexible, fast to implement, does not burden the government’s budget. That there are limitations: it is less effective when business/consumer confidence is low; effectiveness may depend on the type of inflation.
  • Diagram: AD/AS diagram to illustrate contractionary monetary policy.
  • Synthesis (evaluate): strengths and limitations of monetary policy in achieving low inflation. Fiscal policy might be considered as an alternative, but the emphasis of the response should be on monetary policy.
  • Examples: real-world examples of where governments have attempted to lower inflation using monetary policy.

N.B. It should be noted that definitions, theory and examples that have already been given in part (a), and then referred to in part (b), should be rewarded.

Syllabus sections