IB Economics SL 3.5.5 Expansionary and Contractionary Monetary Policy Topic Practice

Level

Marks

0

The work does not meet a standard described by the descriptors below.

1

There is a correct diagram or an accurate written response.

1-2

AD/AS diagram showing a shift of the AD curve to the left and a decrease in real GDP or an explanation that higher interest rates or a reduced (rate of growth of the) money supply would reduce consumption and/or investment therefore causing a fall in AD and a fall in real GDP (increase in unemployment).

2

There is a correct diagram and an accurate written response.

3-4

AD/AS diagram showing a shift of the AD curve to the left and a decrease in real GDP and an explanation that higher interest rates or a reduced (rate of growth of the) money supply would reduce consumption and/or investment therefore causing a fall in AD and a fall in real GDP (increase in unemployment).

Candidates who incorrectly label diagrams can be awarded a maximum of [3].
For ADIAS, the vertical axis may be "average (general) price level", "APL" or "price level". For the horizontal axis, "real output", "real national output", "real income", "real national income", "real GDP" or "real Y". Any abbreviations are acceptable. A title is not necessary. "AS" is a valid label for the SRAS curve.