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Question 18M.1.SL.TZ1.4a

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Date May 2018 Marks available [Maximum mark: 10] Reference code 18M.1.SL.TZ1.4a
Level SL Paper 1 Time zone TZ1
Command term Explain Question number a Adapted from N/A
a.
[Maximum mark: 10]
18M.1.SL.TZ1.4a
(a)

Explain how expansionary fiscal policy could be used to close a deflationary (recessionary) gap.

[10]

Markscheme

Answers may include:

  • definitions of fiscal policy, expansionary fiscal policy, deflationary (recessionary) gap
  • diagram to show the potential effects of expansionary fiscal policy in terms of an outward shift of AD
  • explanation of how an expansionary fiscal policy will boost aggregate demand and increase output, thereby closing a deflationary gap
  • examples of countries that have used expansionary fiscal policy.

Marks should be allocated according to the Paper 1 markbands for May 2013 forward, part A.

 

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