ANSWERS 451
(e) Three marks each for AO2, AO3 and AO4 are likely to
be awarded here. To gain all AO2 marks for level 3, you
must demonstrate clear knowledge and understanding by
developing relevant points. You must also use appropriate
application of economic terms, concepts, theories and
calculations. In this answer, knowledge and understanding
of economic growth is given. Several impacts of economic
growth are identified and economic terms such as GDP per
capita, aggregate demand, unemployment and inflation are
used appropriately and understood.
To gain all three marks for AO3, your answer should
demonstrate excellent selectivity and organisation. It should
also interpret economic information eectively and provide
a thorough analysis of issues. In this answer several positive
impacts of economic growth are analysed eectively. For
example, the answer explains that the government will
receive a boost in tax revenues. As a result, the Indian
government can invest in developing the infrastructure and
spend more on services such as health care, education and
provision for the poor. In India, such spending has increased
the literacy rate and reduced infant mortality. In India the
government is also committed to a huge road construction
programme. This will help improve communications. Firms
will be able to transport goods more easily and people will be
able to travel more quickly, to jobs, for example.
To gain all three AO4 marks at level 3, the answer must
oer more than one viewpoint. The argument must be well
balanced and coherent. It must also lead to an evaluation
that demonstrates full understanding and awareness. This
answer also considers the negative impacts of economic
growth. For example, growth can damage the environment.
Environmental groups believe that the benefits of growth
are greater than the costs of generating that growth. For
example, as economies grow, more cars are purchased and
more flights are taken. Both car and air transport contribute
to greenhouse gases which cause global warming. According
to a report by the World Bank, environmental degradation
costs India about US$80 billion a year. This provides balance
to the answer. Evidence of evaluation in the answer is
provided in the conclusion which states that for most people,
the benefits of growth are greater than the disadvantages.
For a developing country like India, some inflation and
environmental damage may be an acceptable price to pay for
lower levels of poverty, higher life expectancy, more jobs and
income, better infrastructure and higher literacy levels.
4
▶ (a) The percentage change in forecast government
expenditure in New Zealand between 2016 and 2017 is
given by:
= NZD 77,110 million / NZD 74,935 million − NZD 74,935
million / NZD 74,935 million × 100 = NZD 2,175 million ×
100 = 2.9 per cent
(b) There is no sample answer for this question so you can
try it yourself, for exam practice.
(c)
If people are unemployed, the productive potential of
a country is not being fully exploited. As a result, levels
of output are lower than they could be. This means
that national income and living standards will be lower
(on average). Also, people who are out of work do not
make any contribution to production. This is a waste of
resources and results in lower levels of national income.
likely to get access to education and health care. This
has helped to reduce poverty in India. A large proportion
of people in India live in absolute poverty. High levels of
economic growth can help to lift people out of poverty.
Another impact of high economic growth is that the
government will receive a boost in tax revenues. As a
result, the Indian government can invest in developing
the infrastructure and spend more on services such as
health care, education and provision for the poor. In
India, such spending has increased the literacy rate and
reduced infant mortality. In India, the government is also
committed to a huge road construction programme.
This will help improve communications. Firms will be
able to transport goods more easily and people will be
able to travel more quickly, to jobs, for example.
However, economic growth might also have a negative
impact. For example, rapid economic growth can lead
to inflation. If firms run short of capacity, they may not
be able to meet the rising aggregate demand. As a
result, inflation may rise as the economy ‘overheats’.
Inflation can be harmful to the economy, for example, it
leads to an increase in the cost of living.
Rapid growth can also damage the environment.
Environmental groups believe that the benefits of
growth are outweighed by the costs of generating that
growth. For example, as economies grow, more cars are
purchased and more flights are taken. Both car and air
transport contribute to greenhouse gases which cause
global warming. According to a report by the World
Bank, environmental degradation costs India about
US$80 billion a year.
To conclude, the impacts of economic growth are
generally positive. For most people, the benefits
of growth are greater than the disadvantages. For
a developing country like India, some inflation and
environmental damage may be an acceptable price to
pay for lower levels of poverty, higher life expectancy,
more jobs and income, better infrastructure and higher
literacy levels!
Comment
(a) One mark for AO1 is likely to be awarded for this multiple-
choice question. The correct answer is D. Frictional
unemployment occurs when people are temporarily
unemployed as they move from one job to another. In A,
voluntary unemployment is caused by people who have no
desire to work at all at the ‘going’ wage rates. In B, structural
unemployment is caused by declining industries and in
C, cyclical unemployment is caused by a downturn in the
economy in the trade cycle.
(c) Three marks for AO2 are likely to be awarded here. One
mark might be given for identifying dumping as a reason for
protectionism. The other two marks might be awarded for
further development. For example, in this answer the nature
of dumping is explained for one mark, that is, dumping is
where foreign businesses sell goods in overseas countries
at below cost. A third mark might be awarded for explaining
the eect of dumping, it gives foreign companies an unfair
advantage over domestic producers. As a result, domestic
producers might start to struggle for survival.