Question 18M.3.HL.TZ0.e.iv
| Date | May 2018 | Marks available | [Maximum mark: 2] | Reference code | 18M.3.HL.TZ0.e.iv |
| Level | HL | Paper | 3 | Time zone | TZ0 |
| Command term | Draw, Label | Question number | e.iv | Adapted from | N/A |
The following data relate to Country Beta (all figures are in $ billions).
Table 3
In Country Beta, investment by firms increases in the first quarter of 2019.
The following diagram illustrates the long-run aggregate supply curve (LRAS), short-run aggregate supply curve (SRAS) and aggregate demand curve (AD) for Country Beta before the increase in investment.
The increase in investment results in both short-run and long-run effects on the economy. On the diagram above, draw and label the two curves that illustrate these effects.
[2]
For each correctly drawn and labelled shift [1] as shown below.
If candidates show a left shift (or vertical upward shift) of SRAS instead of the right shift in LRAS (focusing on theory of high wages and input costs after AD shifts right and price level rises), they may be awarded full marks.
N.B.: The new short-run equilibrium could be to the left or right or on the intersection of the new LRAS and AD curve.
N.B.: A shift to the right of SRAS may also be shown, but to earn two marks, both AD and LRAS must shift.
N.B.: The new curves should be appropriately labelled.
