IB skill practice

Evaluate monetary policy

Economics SL macroeconomics skill with original exam-style diagram, data-response, and policy-evaluation seeds.

Paper 1, Paper 2 5 marks Difficulty 2

Explain lower interest rates

A central bank briefing in a Sydney newspaper economics article says the cash rate is lowered during weak growth. Explain the transmission mechanism. Use the labelled macro diagram, data, or extract evidence before writing the answer. Enter the answer and choose the interpretation that best matches the macroeconomic evidence.

Worked practice: economic evidence and answer

Identify the economic evidence first, then state the result and interpretation.