LS14 - Factors Influencing Growth And Development (Part 2)

Question 1

Demography

Answer 1

the composition of a human population

Question 2

dependency ratio

Answer 2

the no of dependents in a population divided by the no of working age people

Question 3

what’s the relationship between the size of working age population and productive capacity of the economy?

Answer 3

larger the size of working population the greater the productive potential of an economy will be

Question 4

why is gov spending likely to increase if population is aging?

Answer 4

• larger size of non-working population (U16 & above 67) the greater the burden on the working population
• have to support through healthcare, social care & pensions

Question 5

LEDCs have

Answer 5

• high birth rates, so youthful populations with larger workforces, the greater the potential for economic growth

Question 6

MEDCs have

Answer 6

aging populations, diverging ratio rises, larger amounts of gov spending & resources to support the elderly
less available for supply-side policies & public services, lower levels of economic growth

Question 7

how does speculation lead to currency depreciation

Answer 7

when interest rates are low, the currency gets sold, greater supply of the currency so depreciates reducing the price, lack of confidence in currency
EVAL:
- how long depreciation lasts
- all currencies may depreciate
- may not be sig impact due to strong currency

Question 8

Sustainable debt meaning

Answer 8

con continue/able to pay back the debt

Question 9

principal & interest

Answer 9

• principal - value of the original loan
• interest - determined by IR rate

Question 10

debt service ratio

Answer 10

debt service repayments (principal + Interest) / export earnings

• should be low

Question 11

high service ratios hinder econ growth ratios

Answer 11

high debt burden means large amnt of gov spending used to service debt so less available to spend in other areas e.g public goods
infrastructure/labour force weaker then it could be leading to weaker econ growth

Question 12

how a lack of access to credit & banking can hinder development

Answer 12

• for firms borrowing from banks is an important means of financing business operations e.g. investing in capital stock
• for individuals, the ability to access to banking services allows for security and encourages saving, to spend on goods in future increasing standard of living

Question 13

infrastructure roles

Answer 13

the quality of a country’s infrastructure plays a role in determining the efficiency & quality firms produce at, lower transport cots, get to places quicker
LEDCs tend to have weaker infrastructure then MEDCs - this acts to limit economic growth