How do I answer an evaluation question?

E.g. Evaluate how would a fall in interest rates effect economic growth.

Start by defining the key terms - economic growth, possibly interest rates very briefly.

Draw a diagram showing Aggregate Demand shifting to the right and label it.

Analyse the transmission mechanism: impact on business investment, saving rate, consumer expenditure, employment. Always link to how this will impact economic growth.

Could give examples of fall in interest rate from 2008 downturn.

Evaluate as you go: why might impact on consumer confidence be limited, perhaps people still not confident in economy and so continue to save.

In conclusion, weigh up the likely impact: this may depend on context (if there is a recession) and on other factors like th size of the fall in interest rates, and how high they were to begin with.

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