AS Paper 2, June 2017The UK Economy – Performance and Policies
AS Paper 2, June 2017, Q4(a)
Annotate the aggregate demand and aggregate supply diagram below to show the likely impact of the increase in the personal allowance on the UK’s price level and real output.
Short answerAnnotate2 marks
Context
The Chancellor announced in the 2015 Budget that the personal allowance (the annual income that can be earned before starting to pay income tax) would increase from £10 600 to £11 000 in April 2016. This means most consumers will pay less income tax.
Original diagram required. See the original question paper for the diagram.