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Question 18M.3.HL.TZ0.2b.ii

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Date May 2018 Marks available [Maximum mark: 4] Reference code 18M.3.HL.TZ0.2b.ii
Level HL Paper 3 Time zone TZ0
Command term Explain Question number b.ii Adapted from N/A
b.ii.
[Maximum mark: 4]
18M.3.HL.TZ0.2b.ii

The following information in parts (a) to (d) refers to the economy of Country Alpha.

Table 1

The graph below shows the short-run Phillips curve (SRPC) for Country Alpha.

(b.ii)

The government in Country Alpha reduces income taxes in 2019.
Using information from the graph to support your answer, explain the likely effect on the inflation rate and the unemployment rate.

[4]

Markscheme

N.B.: A response which does not refer to AD (or to consumption) may be awarded a maximum of [2].

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