Assess the view that very low interest rates are good for the UK economy
AQA A-Level Economics Paper 2 June 2023 Insert
Use the extracts and your knowledge of economics to assess the view that very low interest rates are good for the UK economy. (25 marks)
Plan
- Paragraph 1
- Argument: on the one hand, low interest rates are good as they can stimulate investment
- Diagram: right shift in AD and right shift in LRAS
- Evaluation: liquidity trap
- Paragraph 2
- Argument: on the other hand, low interest rates can be damaging as they cause inflation
- Diagram: right shift in AD
- Evaluation: depends on the state of the economy
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