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Pearson Edexcel IAL Economics 2.3.2.2d Causes & effects of changes in th

Practise explaining causes and macroeconomic effects of savings-ratio changes using data, AD diagrams and circular-flow reasoning.

Syllabus
First assessment 2019
Course
Economics YEC11
Level
AS

Exam points

  • draw AD/SRAS diagrams showing how lower saving can raise consumption and real output
  • predict circular-flow effects when higher saving reduces consumption and aggregate demand

2.3.2.2d - Causes and effects of changes in the savings ratio question 1

[Maximum number: 4]

Between June 2021 and June 2022 the savings ratio in the USA fell from 9.5\% to 5.1\%.

Draw an AD and SRAS diagram to show the likely impact of this change in the savings ratio on the economy of the USA.

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