| Date | May 2017 | Marks available | 10 | Reference code | 17M.1.SL.TZ2.04 |
| Level | Standard level | Paper | Paper 1 | Time zone | Time zone 2 |
| Command term | Explain | Question number | 04 | Adapted from | N/A |
Question
Explain the causes of economic growth in terms of an increase in actual output and an increase in potential output.
Discuss the view that the consequences of economic growth are always beneficial.
Markscheme
Answers may include:
- definitions of economic growth, actual output and potential output
- diagram(s) to show an increase in actual output (a movement from a point within to a point closer to the PPC or an increase in AD); and an increase in potential output (shift of the PPC outwards or an increase in LRAS)
- explanation of an increase in actual output through changes in AD and an increase in potential output through changes in LRAS
- examples of the two different types of growth.
Marks should be allocated according to the Paper 1 markbands for May 2013 forward, part A.
Answers may include:
- definition of economic growth
- diagram(s) to show the show the consequences of growth could include AD/AS and negative externality diagrams
- explanation of the different consequences of growth including the impact on living standards, unemployment, inflation, the distribution of income, the current account of the balance of payments, environmental consequences and sustainability
- examples of such consequences in practice
- synthesis or evaluation (discuss).
Discussion may include: a consideration that growth is “always” beneficial, the overall costs of growth in relation to its overall benefits, the costs and benefits of growth in terms of the nature of goods produced, how growth might widen the distribution of income, short-term versus long-term consequences of growth and the link between growth and development.
Marks should be allocated according to the Paper 1 markbands for May 2013 forward, part B.
Examiners report
Syllabus sections
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17M.2.HL.TZ0.03c:
Using a production possibilities curve (PPC) diagram, explain how “the government’s record US$22 billion investment in infrastructure projects” will affect Indonesia’s production possibilities (paragraph 2).
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18M.3.HL.TZ0.2e.iv:
In Country Beta, investment by firms increases in the first quarter of 2019.
The following diagram illustrates the long-run aggregate supply curve (LRAS), short-run aggregate supply curve (SRAS) and aggregate demand curve (AD) for Country Beta before the increase in investment.
The increase in investment results in both short-run and long-run effects on the economy. On the diagram above, draw and label the two curves that illustrate these effects.
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19M.2.HL.TZ0.4a.ii:
Define the term productivity indicated in bold in the text (paragraph [5]).
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17M.2.SL.TZ0.04b:
Using a production possibilities curve (PPC) diagram, explain how “billions of US dollars worth of infrastructure investment from China” may affect potential economic output (paragraph 1).
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19M.2.SL.TZ0.3c:
Using a production possibilities curve (PPC) diagram, explain how rising numbers of university graduates will affect Bhutan’s potential output (paragraph [5]).
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20N.2.SL.TZ0.2c:
Using an AD/AS diagram, explain the desired impact of China’s “eased monetary policy” on its economic growth (paragraph [5]).
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21M.2.HL.TZ0.4a.ii:
Define the term investment indicated in bold in the text (paragraph [5]).
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18M.3.HL.TZ0.2e.iii:
The following diagram illustrates the long-run aggregate supply curve (LRAS), short-run aggregate supply curve (SRAS) and aggregate demand curve (AD) for Country Beta before the increase in investment.
The increase in investment results in both short-run and long-run effects on the economy. On the diagram above, draw and label the two curves that illustrate these effects.
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21M.3.HL.TZ0.1b:
State one reason why the production possibility curve (frontier) for Country H might shift outwards.
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18M.1.SL.TZ2.3a:
Explain how an increase in investment might lead to economic growth.
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18N.2.SL.TZ0.4b:
Using a production possibilities curve (PPC) diagram, explain the effect on economic growth of the “destruction of much of the country’s physical, social and human capital” (paragraph [1]).
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19M.1.SL.TZ1.4a:
Explain the role of improved productivity in achieving economic growth.
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19N.1.SL.TZ0.4a:
Explain, using a production possibilities curve (PPC) diagram, an increase in the actual output of an economy.
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18N.1.HL.TZ0.4a:
Explain the potential effects on the economic growth rate from a substantial increase in the number of skilled people of working age entering a country.
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19N.3.HL.TZ0.3b:
Gardia is aiming to increase its economic growth rate. Explain two sources of economic growth for economically less developed countries.
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21M.2.HL.TZ0.3c:
Using a production possibilities curve (PPC) diagram, explain how the production possibilities (potential output) of the DRC might be affected if there were greater access to electricity (paragraph [4]).
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20N.2.HL.TZ0.4c:
Using a production possibility curve (PPC) diagram, explain how damage to Fiji’s infrastructure has affected its production possibilities (paragraph [1]).
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21N.3.HL.TZ0.3i:
Calculate the total welfare loss resulting from the imposition of the tariff on chia seeds.
