Growing Economies (T4)

Question 1

What is an economy?

Answer 1

This is the state of a country in terms of the production and consumption of goods and services and the supply of money.

Question 2

The wealth of an economy is measured by its…

Answer 2

Gross Domestic Product (GDP)
Bonus: This is the value of all goods and services (output) produced in a country within a year AND firms will be interested in rising/falling trends in figures…

Question 3

What are the key differences between…

1. Developed Economies
2. Emerging Economies
3. Developing Economies

Answer 3

1. 1 Have a relatively high standard of living with high incomes and generous welfare support…
   1.2 Economic growth is relatively slow…
   1.3 The Primary Sector is small, Secondary is static/shrinking and Tertiary is large…
   1.4 Economic activities are capital intensive…
   1.5 High skills/literacy rates…

Answer 4

2.1 Have rising standards of living with rising incomes and increasing welfare support…
2.2 Economic growth is rapid…
2.3 The Primary Sector is relatively declining, Secondary is the largest and Tertiary is smaller but growing rapidly…
2.4 Economic activities are less labour, and instead much more capital intensive…
2.5 Rapid and improving skills/literacy rates…

Answer 5

3. 1 Have a relatively low standard of living with low incomes and little or no welfare support…
   3.2 Economic growth is slow…
   3.3 The Primary Sector is large , Secondary is small and Tertiary is significantly smaller…
   3.4 Economic activities are labour intensive…
   3.5 Shortages in skills/literacy rates…

Question 6

What are the significant benefits towards growth within an emerging economy?

Answer 6

Consumer incomes will be increasing due to labour opportunities provided which can lead to consumer spending on domestic products and those provided by MNC’s which can increase revenue and profits and make the emerging economy look more attractive especially with low labour costs…

Bonus: Consumer incomes rising will also allow them to enjoy higher standards of living where they should gain access to improved education and health care and improve the skills of a workforce, alternatively benefitting Growing Economies from lower unemployment and rising productivity rates…

Question 7

What are the four indicators of growth?

Answer 7

1. Gross Domestic Product (GDP) per capita/individual
2. Literacy rates
3. Health
4. The Human Development Index (HDI)

Question 8

Are there any limitations towards using GDP as an indicator of growth?

Answer 8

1. This ignores work carried out for free for family/friends, making these figures appear lower…
2. It ignores earnings from the black market…
3. It also ignores work completed on a voluntary basis…
4. GDP most importantly ignores the levels of health care and education, other economic growth indicators…

Question 9

What are literacy rates?

Answer 9

This is a % of adults able to read and write used to indicate education opportunities and potential issues surrounding the productivity of a workforce…

Question 10

Why should firms use the HDI to indicate its level of growth?

Answer 10

The Human Development Index combines statistics on education, life expectancy and the Gross National Product per capita and ranks these across all countries…

Question 11

Bonus: Formula for Gross National Product per capita

Answer 11

GDP + Income earned abroad