Question 19M.1.SL.TZ2.3a
| Date | May 2019 | Marks available | [Maximum mark: 10] | Reference code | 19M.1.SL.TZ2.3a |
| Level | SL | Paper | 1 | Time zone | TZ2 |
| Command term | Explain | Question number | a | Adapted from | N/A |
Explain how increased investment by the government in education and training can affect both aggregate demand and aggregate supply.
[10]
Marks should be allocated according to the paper 1 markbands for May 2013 forward, part A.
Answers may include:
- definition of investment, aggregate demand, aggregate supply
- diagrams to show aggregate demand (AD) shifting right and LRAS shifting right
- explanation of how increased investment by the government in education and training can increase AD in the short term by increasing the G component of C+I+G+X-M and increase LRAS in the long term as labour productivity increases
- examples of countries in which the government has increased investment in education and training.
This question was generally well answered by students. The highest achieving responses focused on how increasing the government expenditure on education and training directly increases the G component of aggregate demand. They then went on to explain how higher expenditure on education and training increases aggregate supply as workers become more productive. Some candidates explained how more productive employees may earn higher incomes, which could lead to a rise in aggregate demand. This point has some logic but the focus on the direct impact of a rise in G on aggregate demand is the stronger argument. Explanations supported by a real-world example included countries that fund workplace training schemes.
