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Macroeconomic Objectives · Paper 1 — Free Economics SL Practice Questions
1FoundationSAQ-SIncome distribution4 marksPaper 1~6 min
Country A has a Gini coefficient of . Country B has a Gini coefficient of .
(a)
Define the term "Lorenz curve." [2 marks]
(b)
Using the Gini coefficients provided, explain which country has a more equal distribution of income and deduce one likely consequence of this difference for government redistribution policy. [2 marks]
Solutions
2MasterySAQ-SEconomic growth5 marksPaper 1~8 min
An economy is currently at full employment. The government decides to increase spending on infrastructure projects by USD 20 billion. The marginal propensity to consume (MPC) in this economy is .
(a)
Calculate the size of the multiplier in this economy. [1 mark]
(b)
Draw a fully labelled AD/AS to show the short-run impact of this increase in government spending. Identify and label the inflationary gap on your . [2 marks]
(c)
Explain whether this increase in government spending will lead to sustained long-run economic growth. [2 marks]
Solutions
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