Question 23M.2.SL.TZ0.1f
| Date | May 2023 | Marks available | [Maximum mark: 4] | Reference code | 23M.2.SL.TZ0.1f |
| Level | SL | Paper | 2 | Time zone | TZ0 |
| Command term | Explain | Question number | f | Adapted from | N/A |
Using an AD/AS diagram, explain the likely impact of the reduction of the common external tariff on Uruguay’s potential (long-term) output (Text C, paragraph 1).
[4]
Candidates who label diagrams incorrectly can be awarded a maximum of [3].
For AD/AS, the vertical axis may be Average (General) Price Level, or Price Level. The horizontal axis may be real output, real national output, real income, real national income, real GDP or real Y. Any abbreviation of the previous terms is acceptable. Alternatively, a Keynesian AS may be drawn with the vertical portion shifting to the right. A title is not necessary.
It was evident that many students were unaware that a change in potential (long-term) output can only be demonstrated by a shift in LRAS (or rightward shift of the Keynesian AS). Additionally, a significant number of students didn't consider the information provided in Text C, which was crucial for understanding the reasons behind the shift. Trade liberalization is classified in the subject guide as a market-based policy that promotes competition. Regrettably, many students displayed limited familiarity with the effects of such supply-side policies.
