Economics

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Question: 

Discuss whether or not MNCs are likely to set up in a country with low unemployment (8)

 It is argued that the wage determination in imperfect markets leads to exploitation. It is, therefore, necessary and beneficial if the government intervenes in the determination of wage rates. Discuss whether there is any truth in this argument. (13) (Paper 4).

  
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Discuss whether GDP is a reliable measure of the differences in living standards between developing and developed countries.

Ans: 

The level of development is basically measured by the value of outputs of a country. The economists call this measure GDP (Gross Domestic Products). We define GDP as the value of total outputs produced by a country within a year. So it is widely used for the purpose of measuring the levels of development. Visit the link:https://o-alevelstudyresources.blogspot.com/2020/02/cambridge-level-economic-solved-past.html

 






IGCSE Economics Past Paper Solved(O/A Level Study Resources)


Question

ANS: 

a     a)  The main economic problem of Mints is the higher rate of inflation. It means higher consumption leads to higher outputs and higher prices of goods and services.

b     b)   Number of children were born in 2014 = 17/1000*75000000 = 1,275,000 or 1.28 m

      c) The first reason for increasing the workers’ earning in Nigeria is raising productivity in many sectors in the country. As a result, total outputs, as well as economic activities, have been increased which leads to rising overall income of labour of the country. Another important reason is to set up new multinational companies in Nigeria. Because the Nigerian economy provides an expanded market for them. Thus many workers get an opportunity for extra training facilities and higher wage rates due to setting up multinational companies.

        d)   The Extract suggests that Mexico operates a mixed economy system. In a mixed economy system, the Mexican government has an authorized power to control economic activities like inflation and exchange rate. Besides, private firms can also compete with large firms to increase productivity.

e)     Indonesia’s economy has a fluctuation exchange rate. So the exchange rate of the country has fallen by 7.2%. A fall in the exchange rate is known as depreciation in the exchange rate. It means the currency is worthless compared to other countries.so Imports will become more expensive in the country. Depreciation increases the cost of imports so there will be an increase in cost-push inflation and higher prices of their goods in the domestic market.

f)       Many countries use HDI as a good measure of living standards. The human development index (HDI) assigns numerical values to different countries as a measure of living standards. These values are derived by measuring levels of education, the standard of living, and life expectancy. Countries with higher scores on the index are said to be better developed than those with lower scores. The system is designed to be used to help determine strategies for improving living conditions for people around the world. It can be used to assess why countries with a similar gross domestic product (GDP) have different HDI values and therefore can affect the fiscal and public policy of a nation.

However, some critics argue that these measures are flawed and do not create an accurate picture of living standards. Critics argue that the HDI assigns weights to certain factors that are equal trade-offs, when these measurements may not always be equally valuable. The HDI also fails to take into account factors such as inequality, poverty, and gender disparity. A country with a high value for GDP per capita would indicate a developed country. An additional year of life would add to the GDP and therefore be different in countries with different GDP per capita.

g)      The first important function of the trade union is to set an appropriate wage rate for its members. The trade union usually bargains with employers to set a better wage or hourly rate for all employees.  Another important function of the trade unions is to give better working conditions for its members. It means that all workers can do their job in a safe environment.

h)      The effect of population growth can be positive or negative depending on the circumstances. A large population has the potential to be great for economic development, but limited resources and a larger population puts pressure on the resources that do exist. Different countries have different natural resources. So the proper utilization of all human resources can only be benefited for the economy. It means the country can increase its productivity as well as outputs. Thus, economic growth is likely to increase over a period.

On the other hand, Population growth is not necessary for economic growth. if population growth affects per capita output growth, higher population growth rates would contribute to either higher or lower overall economic growth depending on the nature of its effects on per capita GDP. Through increased productivity, you can have economic growth even if the population is stable. It is incorrect to say that automation and technology have made people less necessary. Automation and technology are changing the nature of the jobs available to people but there is no reason that they should increase unemployment.

If population growth and per capita GDP growth are completely independent, higher population growth rates would clearly lead to higher economic growth rates. It would still be true that the growth in per capita GDP would give rise to improvements in economic well-being.