Development

Question 1

Define development

Answer 1

Multi dimensional process that involves significant qualitative and quantitative improvements over time in human welfare including expanding choices to give peoples lives value and meaning

Question 2

Explain how PPP works

Answer 2

Currency conversion to common currency (usually $)
Same basket of goods and services bought in each country
Exchange rate reflecting cost of living differences

Question 3

Why is growth a good indicator

Answer 3

Higher output and incomes —> people can consumer more and improve living standards
Higher incomes —> greater tax revenue so the government can improve social provision

Question 4

Why is growth a bad indicator

Answer 4

Income distribution not taken into account —> small proportion could hold the majority of the wealth of the country —> high Gini Coefficient

Question 5

What are the limitations of using GDP/GNP per capita as a measure of development for LEDCs

Answer 5

Accuracy —> LEDCs do not have the resources to collect data on output/income/expenditure data
Change in quality of life —> a longer working week achieves higher output but leisure time is reduced so quality of life may decline
Black/informal economy —> some economic activity is not recorded e.g. farming