Question 1
Using the Keynesian AD/AS diagram, explain why an economy may be in equilibrium at any level of real output.
Answers may include:
- definitions of macroeconomic equilibrium and real output
- diagram to show equilibrium at different levels of real output
- explanation of equilibrium at different levels of real output, eg at full employment and less than full employment
- examples of economies operating at different levels of real output and/or of economies at different times in their history.
Assessment Criteria
Part (a) 10 marks
Level 0 (0 marks): The work does not reach a standard described by the descriptors below.
Level 1 (1-3 marks): 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.
Level 2 (4-6 marks): 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.
Level 3 (7-8 marks): 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 are few errors.
Level 4 (9-10 marks): 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 are no significant errors.