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.

Discuss the view that, apart from indicating economic growth rates over time, national income statistics are of little use.

Answers may include:

• definitions of economic growth, growth rate
• diagram(s) to show how an outward shift of the AD curve and/or an outward shift of the LRAS/production possibility curve would lead to economic growth
• explanation of how an increase in the population leads to an increase in AD in the short term (resulting in short-term economic growth) and/or how an increase in the number and qualification of the workforce leads to an increase in the quality and quantity of labour (resulting in long-term economic growth)
• examples of immigration affecting economic growth rates of countries.

Marks should be allocated according to the paper 1 markbands for May 2013 forward, part A.

Answers may include:

• definitions of economic growth, growth rate, (real) GNI/GNP (per capita), (real) GDP (per capita)
• a diagram is not required but candidates may use diagram(s) to show economic growth, inequality in the distribution of income
• explanation of the uses of national income statistics for making comparisons over time, for making comparisons between countries and for making conclusions about the standards of living
• examples of such uses in practice
• synthesis or evaluation (discuss).

Discussion may include: consideration of “little use”, the drawbacks of using national income statistics to make conclusions about the standards of living, practical difficulties of measurement and calculation, the narrowness of such statistics, economic growth versus economic development.

Examiners should be aware that candidates may take a different approach which, if appropriate, should be rewarded.

Opinions or conclusions should be presented clearly and should be supported by appropriate examples.

NB Definitions, theory, and examples that have already been given in part (a), and then referred to in part (b), should be rewarded.

Marks should be allocated according to the paper 1 markbands for May 2013 forward, part B.