Question 22N.1.SL.TZ0.a
| Date | November 2022 | Marks available | [Maximum mark: 10] | Reference code | 22N.1.SL.TZ0.a |
| Level | SL | Paper | 1 | Time zone | TZ0 |
| Command term | Explain | Question number | a | Adapted from | N/A |
Explain two goals of fiscal policy.
[10]
Marks should be allocated according to the paper 1 markbands for May 2022 forward, part A.
Answers may include:
- Terminology: fiscal policy.
- Theory: explanation of any two of the following goals: low and stable inflation, low unemployment, increase short run economic growth, promote a stable economic environment for long-term growth, reduce business cycle fluctuations, equitable distribution of income and/or external balance.
- Diagram: Appropriate diagram(s) to show attainment of the two goals chosen.
A maximum of [6] should be awarded if only one goal of fiscal policy is explained.
Candidates who explain and diagram the supply-side effects of fiscal policy should also be fully rewarded.
The goals of fiscal policy can be explained either through why it is used (e.g. stable inflation) or how it is used (e.g. cutting tax). Both approaches should be equally rewarded.
This question was generally well answered by students. Effective responses considered how fiscal policy can be used to address macroeconomic goals such as economic growth, low inflation and full employment. The strongest answers considered how government expenditure and taxation can be used to affect aggregate demand to achieve the two goals their answer covered. It was pleasing to see clear and accurate AS/AD diagrams used to illustrate the answers given.
