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Pearson Edexcel IAL Economics 2.3.4.3b Causes of changes in equilibrium

Practise explaining how shifts in aggregate demand change equilibrium real national output using extracts, figures and country data.

Syllabus
First assessment 2019
Course
Economics YEC11
Level
AS

Exam points

  • use an AD/AS diagram to show how lower consumption reduces equilibrium real output
  • examine extract evidence on growth forecasts and link weaker AD components to output changes

2.3.4.3b - Causes of changes in equilibrium real national output, as a result of shifts in AD question 1

[Maximum number: 4]

Between May 2022 and April 2023 the central bank of Nigeria increased the country's base rate of interest by six percentage points. Draw an AD and LRAS diagram to show the effect of this increase in the base rate of interest on consumption, the price level and real output.

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