IB Economics HL 3.5.3 Money market equilibrium Question Bank
Practise IB Economics HL 3.5.3 by applying money market equilibrium concepts to exam-style questions.
- Syllabus
- First assessment 2022
- Course
- Economics HL
- Level
- HL
Exam points
- identify the relevant model, concept or evidence
- apply the correct subject framework to the question
- evaluate the result using clear evidence and subject terminology
3.5.3 (HL)—Money market equilibrium question 1
Table 1 shows the gross domestic product (GDP) of the United States of America (USA) economy from 2020 to 2023. The USA is not the fastest growing economy in the world, but it is the largest. It also has the largest budget deficit and the largest current account deficit in the world. As a result, the actions of its central bank, the Federal Reserve, always make news.
Table 1
Sketch a diagram to show how an increase in the money supply is expected to affect the equilibrium interest rate.
Table 2 shows the current account and capital account of the balance of payments, quarterly, for the USA in 2023. It shows that the USA has a persistent current account deficit, and that the main component of that deficit is the balance of trade in goods and services. The country's relatively high labour costs, labour unions and skills shortages in STEM (science, technology, engineering and mathematics) all contribute to the trade deficit.
Table 2
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