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Economic Growth and/or Economic Development Strategies · Paper 1 — Free Economics HL Practice Questions
1FoundationSAQ-SPolicies for promoting economic growth8 marksPaper 1~12 min
A government is considering using expansionary monetary policy to increase the rate of economic growth in a country currently experiencing a recession.
(a)
Define the term "expansionary monetary policy." [1 mark]
(b)
Explain how a reduction in the central bank interest rate could lead to an increase in aggregate demand (AD). [3 marks]
(c)
Using an AD/AS , explain one reason why expansionary monetary policy may fail to restore economic growth during a severe recession. [4 marks]
Solutions
2FoundationSAQ-SPolicies for promoting economic growth4 marksPaper 1~6 min
A government in a developing country wants to promote long-term economic growth by investing in education and training programmes.
(a)
Define supply-side policies. [1 mark]
(b)
Explain how increased government spending on education could increase the economy's productive capacity. [3 marks]
Solutions
3MasterySAQ-SPolicies for promoting economic growth9 marksPaper 1~14 min
Country B is heavily reliant on oil exports. Its government wishes to diversify the economy and achieve sustainable economic growth. It introduces a fiscal policy measure by providing subsidies to firms in the renewable energy sector.
(a)
Define the term subsidy. [1 mark]
(b)
Using an AD/AS , explain how the subsidy affects both aggregate demand short-run aggregate supply in Country B. [4 marks]
(c)
Evaluate whether this fiscal policy is likely to achieve sustainable economic growth in Country B in the long run. [4 marks]
Solutions
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