Question 1
Using the monetarist/new classical model and the Keynesian model, discuss the view that increases in aggregate demand will inevitably be inflationary.
Answers may include:
- definitions of inflation, inflationary, aggregate demand (AD), monetarist/new classical model, Keynesian model
- diagrams to show the impact of an increase in AD in the two different models
- explanation why in the monetarist/new classical model an increase in AD will be inflationary
- examples of cases where an increase in AD either has or has not been inflationary
- synthesis and evaluation (discuss).
Discussion may include: consideration of an increase in AD not being inflationary in the Keynesian model if the economy is operating with spare capacity, consideration of an increase in AD not being inflationary in the monetarist/new classical model if the economy is recovering from equilibrium below the full employment level of output, consideration of the impact of simultaneous improvements on the supply side of the economy as AD increases, a consideration of the word "inevitably", a consideration of the word "inflationary" in the context of the AD/AS model.
Marking guidance:
Award a maximum of level 2 if the response considers either the monetarist/new classical model or the Keynesian model (but not both).
Opinions or conclusions should be presented clearly and should be supported by appropriate examples.
Examiners should be aware that candidates may take a different approach which, if appropriate, should be rewarded.
Assessment Criteria
Level ..... Marks
0 The work does not meet a standard described by the descriptors below. ..... 0
1 There is little understanding of the specific demands of the question. Relevant economic terms are not defined. There is very little knowledge of relevant economic theory. There are significant errors. ..... 1-5
2 There is some understanding of the specific demands of the question. Some relevant economic terms are defined. There is some knowledge of relevant economic theory. There are some errors. ..... 6-9
3 There is understanding of the specific demands of the question. Relevant economic terms are defined. Relevant economic theory is explained and applied. Where appropriate, diagrams are included and applied. Where appropriate, examples are used. There is an attempt at synthesis or evaluation. There are few errors. ..... 10-12
4 There is clear understanding of the specific demands of the question. Relevant economic terms are clearly defined. Relevant economic theory is clearly explained and applied. Where appropriate, diagrams are included and applied effectively. Where appropriate, examples are used effectively. There is evidence of appropriate synthesis or evaluation. There are no significant errors. ..... 13-15
Award a maximum of level 2 if the response considers either the monetarist/new classical model or the Keynesian model (but not both).
Opinions or conclusions should be presented clearly and should be supported by appropriate examples.
Examiners should be aware that candidates may take a different approach which, if appropriate, should be rewarded.
Assessment Criteria
Level
Marks
0
The work does not meet a standard described by the descriptors below.
1
There is little understanding of the specific demands of the question.
1-5
Relevant economic terms are not defined. There is very little knowledge of relevant economic theory. There are significant errors.
2
There is some understanding of the specific demands of the question.
6-9
Some relevant economic terms are defined. There is some knowledge of relevant economic theory. There are some errors.
3
There is understanding of the specific demands of the question.
10-12
Relevant economic terms are defined. Relevant economic theory is explained and applied. Where appropriate, diagrams are included and applied. Where appropriate, examples are used. There is an attempt at synthesis or evaluation. There are few errors.
4
There is clear understanding of the specific demands of the question.
13-15
Relevant economic terms are clearly defined. Relevant economic theory is clearly explained and applied. Where appropriate, diagrams are included and applied effectively. Where appropriate, examples are used effectively. There is evidence of appropriate synthesis or evaluation. There are no significant errors.