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Question SPM.1.SL.TZ0.a

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Date May specimen first teaching 2021 Marks available [Maximum mark: 10] Reference code SPM.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]
SPM.1.SL.TZ0.a

Explain two possible causes of deflation.

[10]

Markscheme

Answers may include:

  • Definition: deflation.
  • Explanation: any determinant of AD that could shift it to the left, eg falling consumer or business confidence, falling consumption, falling investment, falling government spending, or any determinant that shifts AS to the right, eg falling costs of raw materials or labour, increased productivity, rising exchange rate.
  • Diagram: AD/AS diagram to show falling AD or increasing AS in such a way that the average price level falls.

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