Paper 1: Extended response paper HL (a)

Examination paper 1 (microeconomics)

This section includes a sample question for the new paper 1 examination, the extended data response paper.  This question was completed as an exercise in 75 minutes. Read through the response and provide a grade, for each section. Then click on the space below the responses to see how the paper was assessed by the workshop leader.  More specific comments are included in the paper which can be accessed by clicking on the edit link at the bottom of the page. 

I will release more practise papers as soon as they become available.

Question

(a) Explain two expansionary monetary policy tools available to a government or central bank. [10 marks]

Command term: Explain - Give a detailed account including reasons or causes.

Markscheme:
Candidate could be rewarded for any two of the following instruments—open market operations, minimum reserve requirement, base rate changes or quantitative easing.

Maximum mark 10

MarksDescriptor
0The response is below the descriptors described below
1-2The response indicates little understanding of expansionary monetary policy tools available to a central bank
Limited use of relevant economic theory
Relevant terminology not used in the response
3-4

The response indicates some understanding of expansionary monetary policy tools available to a central bank
Some relevant economic theory used 
Some relevant terminology used in the response

5-6

The response shows an understanding of the available policy tools but addresses them only partially
Relevant economic theory partially explained 
Some relevant terminology used appropriately
A money market diagram showing falling interest rates or an AD/AS diagram is included

7-8The response shows a clear understanding of two different expansionary monetary policy tools 
Relevant economic theory is explained 
Relevant terminology used appropriately
A money market diagram showing interest rates falling or an AD/AS diagram is included and explained
9-10The response shows a clear understanding of two different expansionary monetary policy tools 
Relevant economic theory is explained 
Relevant terminology mostly used appropriately
A money market diagram showing falling interest rates or an AD/AS diagram is included and fully explained.

(b) Using real-world examples, evaluate the effectiveness of monetary policy in maintaining a low rate of unemployment.  [15 marks]

Command term: Evaluate

The command term asks candidates to evaluate whether demand or supply-side policies are more effective in increasing the level of national income.  Candidates must consider arguments in support of this statement followed by counter arguments, followed by a suitable conclusion based on the evidence provided.

Real world issue - how does government manage their economy and how effective are these policies.

Responses should include some of the following:

A definition of monetary policy and low unemployment
An explanation of some of the impacts of monetary policy on the economy e.g. employment, growth, inflation and trade
A relevant AD/AS diagram
An evaluation of the strengths and weaknesses of monetary policy in achieving low unemployment. 
Use of real-world examples of where governments have attempted to lower unemployment using monetary policy.

Maximum mark 15

MarksDescriptor
0The response is below the descriptors described below
1-3The response indicates limited understanding of the effectiveness of monetary policy in maintaining a low rate of unemployment
Relevant economic theory not used in the response
Relevant economic terms not used in the response
No evidence of synthesis or evaluation included
No relevant real-world example(s) included 
4-6The response indicates some understanding of the effectiveness of monetary policy in maintaining a low rate of unemployment
Relevant economic theory is described in the response
Some relevant economic terms used in the response
Synthesis or evaluation included but superficially
Relevant real-world example(s) are identified
7-9The response shows an understanding of the effectiveness of monetary policy but this is only partially addressed
Relevant economic theory is described and explained
Some relevant economic terms used appropriately in the response
Synthesis or evaluation included in the response but lacking balance
Relevant real-world example(s) are identified and partially developed
10-12

The specific requirements of the question are understood and addressed
Relevant economic theory is explained
Relevant economic terms are used mostly appropriately
An appropriate AD/AS diagram is included and explained
Synthesis or evaluation included in the response but lacking balance
A relevant real-world example(s) is identified and developed to help support the argument

13-15The response demonstrates a full understanding of the effectiveness of monetary policy but this is fully addressed
Relevant economic theory is fully explained
Relevant economic terms are used appropriately
An appropriate AD/AS diagram is included and fully explained
Balanced synthesis or evaluation is included in the response 
A relevant real-world example(s) are identified and fully developed to support the argument.

Available as a PDF file at:  Mark scheme q7    

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