2.2 Aggregate Demand and Aggregate Supply (questions)
IB Past Paper Questions on macroeconomicsMay 2014 TZ1
3. (a) Using two AD/AS diagrams, explain cost-push and demand-pull inflation. [10 marks]
(b) “The rate of inflation can be most effectively reduced through the use of monetary policy.” To what extent do you agree with this statement? [15 marks]
4. (a) Explain two factors which might cause economic growth. [10 marks]
(b) Evaluate the view that the benefits of economic growth will always outweigh the costs. [15 marks]
May 2014 TZ2
3. (a) Explain how the aggregate demand curve can be shifted by a reduction in
interest rates. [10 marks]
(b) Evaluate the effectiveness of monetary policy to increase aggregate demand during a recession. [15 marks]
4. (a) Explain two factors which might cause economic growth. [10 marks]
(b) Evaluate the view that the benefits of economic growth will always outweigh the costs. [15 marks]
Nov 2013
3. (a) Explain how changes in the size of the circular flow depend on the relative size
of injections and leakages.
[10 marks]
(b) Evaluate the use of national income statistics for making comparisons of the
standard of living over time.
[15 marks]
4. (a) Explain why measuring the rate of inflation using a consumer price index (CPI) may not be accurate. [10 marks]
(b) Evaluate two government policies to reduce inflation. [15 marks]
May 2013 TZ1
3. (a) Explain why the market system may not result in an equitable distribution of income. [10 marks]
(b) Evaluate government policies to promote equity in terms of their effects on efficiency in the allocation of resources. [15 marks]
4. (a) Explain how labour market reforms may be used to promote economic growth. [10 marks]
(b) “Market-oriented supply-side policies will always be more effective in promoting economic growth than demand-side policies.” To what extent do you agree with this statement? [15 marks]
May 2013 TZ2
3. (a) Using a diagram, describe how expansionary monetary policy might be used to
close a deflationary (recessionary) gap. [10 marks]
(b) Discuss why, in contrast to the monetarist/new classical model, an economy
can remain stuck in a deflationary (recessionary) gap according to the
Keynesian model. [15 marks]
4. (a) Explain how labour market reforms may be used to promote economic growth. [10 marks]
(b) “Market-oriented supply-side policies will always be more effective in promoting economic growth than demand-side policies.” To what extent do you agree with this statement? [15 marks]
Nov 2012
2. (a) Explain how a government could bring about a more equal distribution
of income. [10 marks]
(b) Evaluate the effectiveness of government policies designed to reduce inequalities in income. [15 marks]
May 2012 TZ1
2. (a) Explain why governments may view deflation as a threat. [10 marks]
(b) Evaluate the view that a low and stable rate of inflation is beneficial for an economy. [15 marks]
May 2012 TZ2
2. (a) Explain why governments may pursue the macroeconomic goals of low inflation
and low unemployment.
[10 marks]
(b) Evaluate the extent to which the use of expansionary demand-side policies may lead to conflicts between the various goals of macroeconomic policy. [15 marks]
Nov 2011
2. (a) Explain what the multiplier is and, using a numerical example, demonstrate how it can be calculated. [10 marks]
(b) Evaluate whether real Gross Domestic Product (GDP) can be increased by the
use of demand-side policies.
[15 marks]
May 2011 TZ1
2. During the global financial crisis of 2008–2009, there was a fall in consumer spending
in many countries.
(a) Explain the factors which might be responsible for causing consumer spending
to fall. [10 marks]
(b) Evaluate the possible consequences of falling consumer spending for a country’s macroeconomic performance. [15 marks]
May 2011 TZ2
2. (a) Explain two policies a government might use to redistribute income. [10 marks]
(b) “Measures to promote greater income equality should be a key feature of government economic policy.” Evaluate this proposition. [15 marks]
Nov 2010
2. (a) Explain how supply-side improvements to an economy may be achieved through
the use of taxes and government spending. [10 marks]
(b) Evaluate the use of supply-side policies to reduce unemployment. [15 marks]
May 2010 TZ1
2. (a) Explain why a country may wish to reduce its rate of inflation. [10 marks]
(b) Evaluate the likely impact on the economy of relying on higher interest rates to
reduce the rate of inflation.
[15 marks]
May 2010 TZ2
2. (a) Explain why a country may wish to reduce its unemployment rate. [10 marks]
(b) Evaluate the likely effects on the economy of relying on demand-side policies to reduce the unemployment rate. [15 marks]
Nov 2009
2. (a) Explain how the rate of inflation might be measured and the factors which might
make accurate measurement difficult. [10 marks]
(b) Evaluate the extent to which an individual government can influence the rate of
inflation in its economy.
[15 marks]
May 2009
2. (a) Explain the possible causes of a rise in the rate of inflation in an economy. [10 marks]
(b) Evaluate the possible impact on economic performance that may result from a government decision to bring inflation under control. [15 marks]
Nov 2008
3. (a) Explain the difference between progressive taxation and regressive taxation. [10 marks]
(b) Evaluate the possible effects of a decrease in direct taxation on a country’s inflation rate, unemployment rate and balance of payments. [15 marks]
May 2008
2. (a) “The effect of a decrease in aggregate demand on output and the
price level
depends on the shape of the
aggregate supply curve.” Explain this statement. [10
marks]
(b) Evaluate the likely effects of a falling rate of inflation on the performance of
an economy. [15 marks]
Nov 2007
2. (a) Using one or more diagrams, explain the difference between the equilibrium
level of national income and the full employment level of national income. [10 marks]
(b) Evaluate the policies a government may use to increase the full employment level of national income. [15 marks]
May 2007
2. (a) Explain why a government might find it difficult to maintain a low rate of
inflation as the economy approaches full employment. [10 marks]
(b) Evaluate the proposition that the priority in economic management should be the maintenance of low unemployment. [15 marks]
For example:
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