DP Economics
Question 22N.1.HL.TZ0.2a
| Date | November 2022 | Marks available | [Maximum mark: 10] | Reference code | 22N.1.HL.TZ0.2a |
| Level | HL | Paper | 1 | Time zone | TZ0 |
| Command term | Explain | Question number | a | Adapted from | N/A |
a.
[Maximum mark: 10]
22N.1.HL.TZ0.2a
(a)
Explain why a sustainable level of government (national) debt is an important macroeconomic objective.
[10]
Markscheme
Marks should be allocated according to the paper 1 markbands for May 2022 forward, part A.
Answers may include:
- Terminology: Government (national) debt, sustainable government (national) debt.
- Diagrams: Candidates might use an AD/AS diagram to illustrate changes in government spending, but the question can be answered without the use of a diagram.
- Theory: An explanation of how government debt might be measured as a percentage of GDP. Candidates may also explain how a budget deficit is related to government (national) debt. Candidates might explain sustainable debt in terms of servicing costs, credit ratings and how future taxation and government spending might be impacted by debt and whether these are sustainable.
Examiners report
A significant number of candidates did not know what the national debt was. It was confused with a budget deficit in many cases and with a trade deficit in extreme cases. The highest-achieving responses were able to explain the link between budget deficits and national debt. From that point they could go on to explain why a sustainable national debt is an important macroeconomic objective, for example, in order to avoid excessive impacts on future spending plans by governments and to keep down the costs of debt servicing.
