Practise Cambridge IGCSE Economics by explaining growth causes and evaluating its effects on living standards, employment, inequality, inflation and the environment.
In 2023, the Canadian Prime Minister said that his country's aim was to increase immigration to half a million a year. This was because the country was experiencing labour shortages and an increase in life expectancy. More workers in Canada would increase the tax revenue available to spend on pensions, and more workers would also increase consumer spending. An increase in the immigration of both skilled and unskilled workers might affect the country's car industry.
Analyse how an increase in consumer spending could increase economic growth.
Analyse how an increase in consumer spending could increase economic growth.
Coherent analysis which might include an increase in consumer spending may:
- increase total demand ( 1 ) this may increase confidence (1) may encourage firms to increase their output (1) firms' revenue / profits increase (1) leads to more investment / innovation (1) new firms may start up (1) raise GDP (1)
- increase output, firms may buy capital goods / invest (1) this will increase productive capacity ( 1 )
- increase output, more workers may be employed (1) this will reduce unemployment (1) increase incomes (1) increase consumer spending further (1)
- increase (indirect) tax revenue ( 1 ) which can be spent on e.g. infrastructure / education / healthcare (1) leading to further increase in productive capacity / GDP (1).
6
Only reward increasing productive capacity and raising GDP once.
Reward but do not expect reference to the multiplier effect.