Assess whether an increase in the money supply is always damaging for an economy
AQA A-Level Economics Paper 1 June 2024
Assess whether an increase in the money supply is always damaging for an economy. (June 2024)
Plan
- Paragraph 1
- Argument: an increase in the money supply can be damaging as it can cause demand-pull inflationary pressure
- Diagram: increase in AD
- Evaluation: depends on the state of the economy
- Paragraph 2
- Argument: an increase in the money supply might be necessary to stimulate economic growth and investment
- Diagram: increase in AD, increase in LRAS
- Evaluation: liquidity trap
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