Practise measuring and interpreting growth, inflation, unemployment and external performance, then evaluate what each indicator reveals about an economy.
The data shows the quarterly percentage growth of real GDP for Belgium between Q1 2019 and Q4 2019.
With reference to the overall trend of the data, explain what is meant by the term 'growth of real GDP'.
Sources for use with Section C
The economy of Ireland
Figure 1 Annual real GDP growth rate (%), 2013 to 2022
Figure 2 Annual real GDP growth rate (%) for selected countries, 2022
Extract A Limitations of using GDP Many economists argue that Ireland’s high rate of economic growth for 2022 is not accurate. They claim that Ireland only experiences high rates of economic growth because international companies take advantage of the country’s low corporation tax rate of 12.5%. This tax rate is lower than the corporation tax rates of many other 5 European countries and has attracted over 1 500 international companies. Some of these companies are so large that the country’s GDP figures may be overstated. For example, Apple Inc., the world’s largest technology company, moved its European base to Ireland in 2015. This resulted in a significant increase in the country’s rate of economic growth. In 2018 the global sales of Apple iPhones accounted for 25% of the 10 GDP growth rate in Ireland. In 2022 there were large fluctuations in Ireland’s industrial production data. It rose or fell by more than 10% from one month to the next. This led to Ireland’s central bank reviewing how it calculated seasonal adjustments when measuring the country’s GDP. Economists suggested that Ireland’s GDP data was meaningless as a guide to how the 15 economy is performing. For example, they argued that using GDP can mislead analysis of matters related to income inequality and the environment. However, Ireland’s central bank defended this measurement of the country’s rate of economic growth for 2022. It indicated that the activities of international companies had a positive impact on living standards in Ireland. Between 2015 and 2022 employment 20 increased from 2.06 million to 2.55 million. This contributed to a significant increase in government revenues from income tax and corporation tax. In 2022 the country’s corporation tax receipts rose to an all-time high of €22.6 billion. Ireland’s central bank also uses Gross National Income (GNI) as an alternative measure of economic growth. This measure removes the impact of international companies and 25 provides a better understanding of domestic demand. According to the GNI measure, Ireland’s rate of economic growth was much lower at 5.9% in 2022. In 2023 Ireland’s rate of economic growth was expected to decrease to just 4%, as measured by GDP. This is as a result of a high rate of inflation, rising interest rates and the weakening state of the global economy. Forecasts also suggest that between 2024 30 and 2027, GDP is likely to grow by an average of 3.5% per year.
Explain what is meant by Gross National Income (Extract A, line 24).
With reference to Figure 2, Extract A and your own knowledge, discuss the limitations of using GDP to compare living standards between countries.
Sources for use with Section C
The economy of China
Figure 1 Year on year real GDP growth rate by quarter, Q1 2020 to Q2 2022
Figure 2 Youth unemployment rate (16 to 24 year olds), as measured by the International Labour Organization (ILO), January 2022 to June 2022
Extract A Economic growth In the second quarter of 2022 China experienced a low rate of economic growth. This was as a result of domestic demand for goods and services, and exports rising more slowly compared with the previous quarter. Economists estimated that China’s economy would continue to experience a low rate of economic growth until the end 5 of the year. Therefore, the country’s economic growth forecast for 2022 was reduced from 5.5% to 4.3%. This low economic growth rate resulted in a further increase in the already high rate of youth unemployment. China has too many college and university graduates for the economy to employ. In 2022 there was also a mismatch between the jobs that are 10 available and students’ qualifications. For example, at the start of the third quarter of 2022, only 0.70 jobs were available for each graduate. To increase the rate of economic growth the Government implemented a reflationary fiscal policy. It increased spending on infrastructure by over $75 billion and reduced taxes for businesses. It planned to increase science and technology‑related 15 investments by providing 100% tax breaks on research and development spending. The country’s central bank, the People’s Bank of China (PBoC), implemented a reflationary monetary policy to increase the country’s economic growth rate. For example, the PBoC decreased the base rate of interest from 3.7% to 3.65% in August 2022. There was also a reduction in the reserve asset (liquidity) requirements 20 in November 2022. This was in contrast to the policy of central banks in several advanced economies which implemented deflationary monetary policy. One economist stated that “the room for manoeuvre” for a reflationary monetary policy by the PBoC was limited because of rising US interest rates. He also emphasised the risks associated with a fall in the external value of the Chinese 25 currency, the Renminbi.
Define the term 'real GDP' (Figure 1).
With reference to Figure 2, explain how ILO unemployment is measured.
With reference to Extract A, analyse two causes of China's high youth unemployment rate.
Sources for use with Section C
The economy of Ireland
Figure 1 Annual real GDP growth rate (%), 2013 to 2022
Figure 2 Annual real GDP growth rate (%) for selected countries, 2022
Extract A Limitations of using GDP Many economists argue that Ireland’s high rate of economic growth for 2022 is not accurate. They claim that Ireland only experiences high rates of economic growth because international companies take advantage of the country’s low corporation tax rate of 12.5%. This tax rate is lower than the corporation tax rates of many other 5 European countries and has attracted over 1 500 international companies. Some of these companies are so large that the country’s GDP figures may be overstated. For example, Apple Inc., the world’s largest technology company, moved its European base to Ireland in 2015. This resulted in a significant increase in the country’s rate of economic growth. In 2018 the global sales of Apple iPhones accounted for 25% of the 10 GDP growth rate in Ireland. In 2022 there were large fluctuations in Ireland’s industrial production data. It rose or fell by more than 10% from one month to the next. This led to Ireland’s central bank reviewing how it calculated seasonal adjustments when measuring the country’s GDP. Economists suggested that Ireland’s GDP data was meaningless as a guide to how the 15 economy is performing. For example, they argued that using GDP can mislead analysis of matters related to income inequality and the environment. However, Ireland’s central bank defended this measurement of the country’s rate of economic growth for 2022. It indicated that the activities of international companies had a positive impact on living standards in Ireland. Between 2015 and 2022 employment 20 increased from 2.06 million to 2.55 million. This contributed to a significant increase in government revenues from income tax and corporation tax. In 2022 the country’s corporation tax receipts rose to an all-time high of €22.6 billion. Ireland’s central bank also uses Gross National Income (GNI) as an alternative measure of economic growth. This measure removes the impact of international companies and 25 provides a better understanding of domestic demand. According to the GNI measure, Ireland’s rate of economic growth was much lower at 5.9% in 2022. In 2023 Ireland’s rate of economic growth was expected to decrease to just 4%, as measured by GDP. This is as a result of a high rate of inflation, rising interest rates and the weakening state of the global economy. Forecasts also suggest that between 2024 30 and 2027, GDP is likely to grow by an average of 3.5% per year.
Explain what is meant by Gross National Income (Extract A, line 24).
Sources for use with Section C
The economy of China
Figure 1 Year on year real GDP growth rate by quarter, Q1 2020 to Q2 2022
Figure 2 Youth unemployment rate (16 to 24 year olds), as measured by the International Labour Organization (ILO), January 2022 to June 2022
Extract A Economic growth In the second quarter of 2022 China experienced a low rate of economic growth. This was as a result of domestic demand for goods and services, and exports rising more slowly compared with the previous quarter. Economists estimated that China’s economy would continue to experience a low rate of economic growth until the end 5 of the year. Therefore, the country’s economic growth forecast for 2022 was reduced from 5.5% to 4.3%. This low economic growth rate resulted in a further increase in the already high rate of youth unemployment. China has too many college and university graduates for the economy to employ. In 2022 there was also a mismatch between the jobs that are 10 available and students’ qualifications. For example, at the start of the third quarter of 2022, only 0.70 jobs were available for each graduate. To increase the rate of economic growth the Government implemented a reflationary fiscal policy. It increased spending on infrastructure by over $75 billion and reduced taxes for businesses. It planned to increase science and technology‑related 15 investments by providing 100% tax breaks on research and development spending. The country’s central bank, the People’s Bank of China (PBoC), implemented a reflationary monetary policy to increase the country’s economic growth rate. For example, the PBoC decreased the base rate of interest from 3.7% to 3.65% in August 2022. There was also a reduction in the reserve asset (liquidity) requirements 20 in November 2022. This was in contrast to the policy of central banks in several advanced economies which implemented deflationary monetary policy. One economist stated that “the room for manoeuvre” for a reflationary monetary policy by the PBoC was limited because of rising US interest rates. He also emphasised the risks associated with a fall in the external value of the Chinese 25 currency, the Renminbi.
Define the term 'real GDP' (Figure 1).
The chart shows index numbers of real GDP in selected countries between 2020 and 2023 (2020, Q1 = 100).
Which one of the following statements is correct?
France's real GDP was lower in 2023 than it was in 2020
Spain experienced a smaller recession than Italy in 2020
Between 2020 and 2023, inflation was lower in France than in Germany
Between 2020 and 2023, economic growth was higher in Italy than in Spain
The World Bank calculates a 'Purchasing Power Parity (PPP)-adjusted level of GDP' for different countries.
Which one of the following is compared when calculating PPP?
The price of a basket of comparable goods and services in different countries
Real incomes, national happiness and wellbeing in different countries
The external value of one currency in terms of the US dollar
Inflation rates in different countries over a given time period
Explain the difference between positive and negative economic growth rates using the Ukraine chart.
Sources for use with Section C.
The French economy
Figure 1 Quarterly real GDP growth rate, Q2 2017 to Q1 2020
Figure 2 Consumer Price Index (CPI), weights and annual percentage price changes, June 2020
Figure 3 CPI inflation rate, January to June 2020
Extract A Inflation, trade and demand-side policy
Throughout 2019 the average price level was rising at a faster rate than nominal wages in France. For example, in Q4 2019 nominal wages rose by 0.2% while the inflation rate was 1.5%. This caused a decrease in living standards for many people.
The inflation rate in France fell in the first six months of 2020. In June it was 0.1%, its lowest level in over four years. This was partly caused by the fall in global energy prices. France was the first major global economy to announce that it was in recession in 2020. France’s real GDP fell by 5.3% in Q1 of 2020.
In April 2020, the value of exports from France fell by 32.4% to €23.7 billion. In particular, France exported fewer cars and pharmaceutical products. In the same month, imports into France fell 25% to €28.7 billion.
In response to the fall in its real GDP, the French Government introduced a range of demand-side policies. It spent €135 billion (over 5% of French GDP) to help the economy to recover. The Government also delayed or cancelled many firms’ tax payments and it guaranteed loans worth €342 billion to businesses.
As France is part of the euro area, monetary policy is conducted by the European Central Bank (ECB). The ECB kept its base interest rate very low throughout 2020. In June 2020 the weaker inflation outlook for the euro area caused the ECB to also expand the size of its asset purchase scheme (quantitative easing) by €600 billion to €1.35 trillion. In December 2020 a further increase in quantitative easing of €500 billion was announced by the ECB. The duration of the scheme was also extended to at least March 2022.
Define the term 'recession' (Extract A, line 7).
Sources for use with Section C
The economy of Ireland
Figure 1 Annual real GDP growth rate (%), 2013 to 2022
Figure 2 Annual real GDP growth rate (%) for selected countries, 2022
Extract A Limitations of using GDP Many economists argue that Ireland’s high rate of economic growth for 2022 is not accurate. They claim that Ireland only experiences high rates of economic growth because international companies take advantage of the country’s low corporation tax rate of 12.5%. This tax rate is lower than the corporation tax rates of many other 5 European countries and has attracted over 1 500 international companies. Some of these companies are so large that the country’s GDP figures may be overstated. For example, Apple Inc., the world’s largest technology company, moved its European base to Ireland in 2015. This resulted in a significant increase in the country’s rate of economic growth. In 2018 the global sales of Apple iPhones accounted for 25% of the 10 GDP growth rate in Ireland. In 2022 there were large fluctuations in Ireland’s industrial production data. It rose or fell by more than 10% from one month to the next. This led to Ireland’s central bank reviewing how it calculated seasonal adjustments when measuring the country’s GDP. Economists suggested that Ireland’s GDP data was meaningless as a guide to how the 15 economy is performing. For example, they argued that using GDP can mislead analysis of matters related to income inequality and the environment. However, Ireland’s central bank defended this measurement of the country’s rate of economic growth for 2022. It indicated that the activities of international companies had a positive impact on living standards in Ireland. Between 2015 and 2022 employment 20 increased from 2.06 million to 2.55 million. This contributed to a significant increase in government revenues from income tax and corporation tax. In 2022 the country’s corporation tax receipts rose to an all-time high of €22.6 billion. Ireland’s central bank also uses Gross National Income (GNI) as an alternative measure of economic growth. This measure removes the impact of international companies and 25 provides a better understanding of domestic demand. According to the GNI measure, Ireland’s rate of economic growth was much lower at 5.9% in 2022. In 2023 Ireland’s rate of economic growth was expected to decrease to just 4%, as measured by GDP. This is as a result of a high rate of inflation, rising interest rates and the weakening state of the global economy. Forecasts also suggest that between 2024 30 and 2027, GDP is likely to grow by an average of 3.5% per year.
With reference to Figure 2, Extract A and your own knowledge, discuss the limitations of using GDP to compare living standards between countries.
Guinea's real GDP per capita increased from $4127 to $5434 between 2013 and 2021. Guinea's average world happiness score for 2012-2014 and 2020-2022 is shown in the table. This score gives a value between 0 and 10 , where 10 is the highest level of subjective happiness.
With reference to Guinea, explain one likely impact of higher real incomes on subjective happiness.
Sources for use with Section C
The eurozone economy
Figure 1 Annual real GDP growth rate, Q1 2018 to Q3 2020
Figure 2 Inflation rate, as measured by the Consumer Price Index (CPI), January 2020 to December 2020
Extract A Monetary policy
In November 2020 the European Central Bank (ECB) highlighted that there were “worrying signals” about the future state of the eurozone economy. It indicated that low business confidence had caused a fall in the demand for bank loans. At the same time, there was a decrease in the availability of credit. These factors resulted in significantly lower levels of investment.
In response the ECB immediately launched an additional round of quantitative easing in December 2020. This programme was reintroduced to help the eurozone economy to recover from negative rates of economic growth, rising unemployment and to prevent another recession. It announced a €500 billion increase in the size of its quantitative easing programme for the period January 2021 to September 2021.
The ECB also announced the provision of extra low-cost funding for banks, aimed at encouraging an increase in bank lending. It agreed to finance the banks at negative interest rates of –1% until June 2022. This meant that the ECB would be paying banks to borrow more money, provided they continue to lend.
Economists have suggested that a reflationary policy could be needed for years, given the weak state of the eurozone economy. In 2020 economic growth in the eurozone was –6.7%. The ECB forecast an economic growth rate of only 3.9% in 2021, 4.2% in 2022 and 2.1% in 2023. The ECB also forecast that the rate of inflation in 2023 will increase but remain below its 2% target.
However, it is unlikely that the ECB can manage the entire burden of supporting the eurozone recovery. Market forces have already reduced the effectiveness of existing policies. For example, in 2020 the eurozone’s currency, the euro, traded at its highest level against the US dollar for more than two years. The ECB said it was “very carefully” monitoring the impact of the increase in the exchange rate of the euro against the US dollar.
Economists are concerned that the ECB’s asset purchases will have a limited impact because interest rates are already extremely low. They argue that reflationary fiscal policy will be necessary to stimulate economic recovery.
With reference to Figure 2, explain the difference between disinflation and deflation.
Sources for use with Section C.
The French economy
Figure 1 Quarterly real GDP growth rate, Q2 2017 to Q1 2020
Figure 2 Consumer Price Index (CPI), weights and annual percentage price changes, June 2020
Figure 3 CPI inflation rate, January to June 2020
Extract A Inflation, trade and demand-side policy
Throughout 2019 the average price level was rising at a faster rate than nominal wages in France. For example, in Q4 2019 nominal wages rose by 0.2% while the inflation rate was 1.5%. This caused a decrease in living standards for many people.
The inflation rate in France fell in the first six months of 2020. In June it was 0.1%, its lowest level in over four years. This was partly caused by the fall in global energy prices. France was the first major global economy to announce that it was in recession in 2020. France’s real GDP fell by 5.3% in Q1 of 2020.
In April 2020, the value of exports from France fell by 32.4% to €23.7 billion. In particular, France exported fewer cars and pharmaceutical products. In the same month, imports into France fell 25% to €28.7 billion.
In response to the fall in its real GDP, the French Government introduced a range of demand-side policies. It spent €135 billion (over 5% of French GDP) to help the economy to recover. The Government also delayed or cancelled many firms’ tax payments and it guaranteed loans worth €342 billion to businesses.
As France is part of the euro area, monetary policy is conducted by the European Central Bank (ECB). The ECB kept its base interest rate very low throughout 2020. In June 2020 the weaker inflation outlook for the euro area caused the ECB to also expand the size of its asset purchase scheme (quantitative easing) by €600 billion to €1.35 trillion. In December 2020 a further increase in quantitative easing of €500 billion was announced by the ECB. The duration of the scheme was also extended to at least March 2022.
With reference to Figure 2, explain how the CPI inflation rate is calculated.
South Korea’s producer price index fell from July to September 2019. What was the most likely effect?
Real incomes fall
Cost-push inflation
Consumer prices fall
Base rate rises
Sources for use with Section C The US economy
Annual rate of inflation, as measured by the consumer price index (CPI), January 2020 to December 2023
Extract A Rate of inflation Between 2021 and 2023 the US economy experienced a relatively high rate of inflation. The main causes of this were disruptions to the supply chain as a result of the global health crisis of 2020–2022, rising global prices of energy and food in 2021–2022, and high wage growth in 2022–2023. The country’s central bank, the Federal Reserve (Fed), forecast that the rate of inflation would return to the inflation target of 2% in 2024. It indicated that energy prices and food prices had started to fall. It expected slower wage growth as the rate of inflation decreased. The Fed believed that the rate of inflation would fall without causing a significant rise in the rate of unemployment. It forecast that the rate of unemployment would average 4% in 2024, a little higher than the 50-year low of 3.6% in 2023.
Extract B Economic growth The USA’s rate of economic growth increased from 1.9% in 2022 to 2.5% in 2023. High consumer spending on services, such as hotels and travel, was the major factor that contributed to economic growth. Government policy also played an important role in increasing the growth rate. The US Government spent $1 trillion on infrastructure projects including the building of roads, airports and bridges. These projects resulted in the creation of new jobs. Economists forecast that the rate of increase in economic growth was likely to slow down in 2024. This is because there had been a series of interest rate increases by the Fed. This resulted in the country’s base rate of interest increasing from 0.25% in March 2022 to a record high of 5.5% in July 2023. In addition, consumers in the USA were relying more on credit cards to finance their spending. It was predicted that more consumers would find it difficult to pay interest on their mortgages, car loans and credit cards. Consumers were also struggling to finance the rising costs of car insurance, medical care and childcare. Although some economists expected a recession in 2024, many were optimistic that the US economy would stabilise without causing any major job losses.
With reference to Figure 1 and the first paragraph of Extract A, examine two causes of the relatively high rate of inflation in the USA.
In July 2021 Rwanda's inflation rate was -1.1% and in November 2021 it was -3.4%.
Evaluate possible causes of deflation. Refer to a country of your choice in your answer.
Sources for use with Section C.
The French economy
Figure 1 Quarterly real GDP growth rate, Q2 2017 to Q1 2020
Figure 2 Consumer Price Index (CPI), weights and annual percentage price changes, June 2020
Figure 3 CPI inflation rate, January to June 2020
Extract A Inflation, trade and demand-side policy
Throughout 2019 the average price level was rising at a faster rate than nominal wages in France. For example, in Q4 2019 nominal wages rose by 0.2% while the inflation rate was 1.5%. This caused a decrease in living standards for many people.
The inflation rate in France fell in the first six months of 2020. In June it was 0.1%, its lowest level in over four years. This was partly caused by the fall in global energy prices. France was the first major global economy to announce that it was in recession in 2020. France’s real GDP fell by 5.3% in Q1 of 2020.
In April 2020, the value of exports from France fell by 32.4% to €23.7 billion. In particular, France exported fewer cars and pharmaceutical products. In the same month, imports into France fell 25% to €28.7 billion.
In response to the fall in its real GDP, the French Government introduced a range of demand-side policies. It spent €135 billion (over 5% of French GDP) to help the economy to recover. The Government also delayed or cancelled many firms’ tax payments and it guaranteed loans worth €342 billion to businesses.
As France is part of the euro area, monetary policy is conducted by the European Central Bank (ECB). The ECB kept its base interest rate very low throughout 2020. In June 2020 the weaker inflation outlook for the euro area caused the ECB to also expand the size of its asset purchase scheme (quantitative easing) by €600 billion to €1.35 trillion. In December 2020 a further increase in quantitative easing of €500 billion was announced by the ECB. The duration of the scheme was also extended to at least March 2022.
With reference to Figure 3 and Extract A, examine two likely effects on the French economy of the trend in the inflation rate in 2020.
Sources for use with Section C
The economy of China
Figure 1 Year on year real GDP growth rate by quarter, Q1 2020 to Q2 2022
Figure 2 Youth unemployment rate (16 to 24 year olds), as measured by the International Labour Organization (ILO), January 2022 to June 2022
Extract A Economic growth In the second quarter of 2022 China experienced a low rate of economic growth. This was as a result of domestic demand for goods and services, and exports rising more slowly compared with the previous quarter. Economists estimated that China’s economy would continue to experience a low rate of economic growth until the end 5 of the year. Therefore, the country’s economic growth forecast for 2022 was reduced from 5.5% to 4.3%. This low economic growth rate resulted in a further increase in the already high rate of youth unemployment. China has too many college and university graduates for the economy to employ. In 2022 there was also a mismatch between the jobs that are 10 available and students’ qualifications. For example, at the start of the third quarter of 2022, only 0.70 jobs were available for each graduate. To increase the rate of economic growth the Government implemented a reflationary fiscal policy. It increased spending on infrastructure by over $75 billion and reduced taxes for businesses. It planned to increase science and technology‑related 15 investments by providing 100% tax breaks on research and development spending. The country’s central bank, the People’s Bank of China (PBoC), implemented a reflationary monetary policy to increase the country’s economic growth rate. For example, the PBoC decreased the base rate of interest from 3.7% to 3.65% in August 2022. There was also a reduction in the reserve asset (liquidity) requirements 20 in November 2022. This was in contrast to the policy of central banks in several advanced economies which implemented deflationary monetary policy. One economist stated that “the room for manoeuvre” for a reflationary monetary policy by the PBoC was limited because of rising US interest rates. He also emphasised the risks associated with a fall in the external value of the Chinese 25 currency, the Renminbi.
With reference to Figure 2, explain how ILO unemployment is measured.
Sources for use with Section C
The economy of China
Figure 1 Year on year real GDP growth rate by quarter, Q1 2020 to Q2 2022
Figure 2 Youth unemployment rate (16 to 24 year olds), as measured by the International Labour Organization (ILO), January 2022 to June 2022
Extract A Economic growth In the second quarter of 2022 China experienced a low rate of economic growth. This was as a result of domestic demand for goods and services, and exports rising more slowly compared with the previous quarter. Economists estimated that China’s economy would continue to experience a low rate of economic growth until the end 5 of the year. Therefore, the country’s economic growth forecast for 2022 was reduced from 5.5% to 4.3%. This low economic growth rate resulted in a further increase in the already high rate of youth unemployment. China has too many college and university graduates for the economy to employ. In 2022 there was also a mismatch between the jobs that are 10 available and students’ qualifications. For example, at the start of the third quarter of 2022, only 0.70 jobs were available for each graduate. To increase the rate of economic growth the Government implemented a reflationary fiscal policy. It increased spending on infrastructure by over $75 billion and reduced taxes for businesses. It planned to increase science and technology‑related 15 investments by providing 100% tax breaks on research and development spending. The country’s central bank, the People’s Bank of China (PBoC), implemented a reflationary monetary policy to increase the country’s economic growth rate. For example, the PBoC decreased the base rate of interest from 3.7% to 3.65% in August 2022. There was also a reduction in the reserve asset (liquidity) requirements 20 in November 2022. This was in contrast to the policy of central banks in several advanced economies which implemented deflationary monetary policy. One economist stated that “the room for manoeuvre” for a reflationary monetary policy by the PBoC was limited because of rising US interest rates. He also emphasised the risks associated with a fall in the external value of the Chinese 25 currency, the Renminbi.
With reference to Extract A, analyse two causes of China's high youth unemployment rate.
The unemployment rate in Sri Lanka increased from 5.2% in 2021 to 6.7% in 2022.
Which one of the following is the most likely effect of this increase in the unemployment rate?
An increase in national happiness in Sri Lanka
An increase in the level of profits for firms in Sri Lanka
A decrease in tax revenues for Sri Lanka's Government
A decrease in welfare payments by Sri Lanka's Government
In Indonesia it is estimated that approximately 27% of part-time workers are employed for fewer hours than they would be willing to work.
Which one of the following may be deduced from this information?
There is a high level of underemployment in Indonesia
There is a high level of economic inactivity in Indonesia
There is a high rate of unemployment in Indonesia
There is a high rate of inflation in Indonesia
Sources for use with Section C
The UK economy
Figure 1 Index of productivity for selected countries (2010=100), 2010 to 2020
Figure 2 UK net migration, 2010 to 2019
Extract A Low productivity
In 2021 the UK Government argued that the disruption in UK supply chains was mainly as a result of low wages, inadequate skills, and low productivity. The Government stated that reductions in welfare benefits and in the number of low-skilled immigrants were needed to increase the country’s productivity. 5 The UK Government suggested that a decrease in low-skilled immigration would force businesses to invest in training and in capital equipment. The goal of successive UK Governments has been to increase the UK’s productivity to improve living standards. However, between 1997 and 2008, the average annual productivity growth was only 1.9%. Between 2009 and 2019 it fell to 0.7%. 10 By 2021 productivity was nearly 20% below the level it would have reached if it had continued at 1.9%. Some economists believe that high rates of net migration were not the only reason for the UK’s poor productivity performance. They suggested that three other factors were also significant: 15; the 2008 global financial crisis; the UK’s decision to leave the European Union; the 2020–2022 global health crisis. These factors made many UK businesses particularly cautious about investing in innovation and research and development. 20 In 2021 UK employers reported they were facing significant wage increases, especially in jobs where severe shortages exist. There was a concern that these wage increases would harm the UK economy unless there was a growth in productivity. However, some economists argue that rising wages could incentivise businesses to invest in labour-saving machinery and staff training. 25 The shock of the global health crisis may provide a much-needed boost to UK productivity for reasons not associated with labour shortages. Many businesses have an opportunity to innovate and improve their operations before restarting again. The UK Government intends to solve the country’s low productivity by increasing investment in skills and in infrastructure. It is essential that it works in partnership with 30 businesses to achieve an increase in productivity and in the rate of economic growth.
Define the term 'net migration' (Extract A, line 13).
With reference to Figure 2 and Extract A, analyse two possible impacts of net migration on the UK economy.
The table shows the value of exports and imports of goods and services, $ billion, for Thailand in 2020 and 2021.
Calculate the change in Thailand's balance of trade between 2020 and 2021. Show your workings.
The chart shows Spain's current account of the balance of payments between July 2021 and May 2022.
With reference to the chart, explain the difference between a current account deficit and a current account surplus.