CAIE IGCSE Economics 5.1 Living Standards Topic Practice

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Covered syllabus points

5.1.1—Indicators of living standards5.1.2—Comparing living standards and income distribution

Question 1

[Maximum number: 8]

There are several policy measures a central bank or government can use to reduce unemployment. One policy measure a government could use to reduce unemployment is to increase its spending on building houses. The Federal Reserve, the central bank of the US, has two main aims. One is to maintain price stability and the other is to achieve full employment. Some central banks also have economic growth as a target, but none have HDI value as a target.

Discuss whether or not an increase in a country's economic growth rate will increase its HDI value.

Question 2

[Maximum number: 4]

In 2022, more than a quarter of a million workers, including doctors, left Sri Lanka to work in other countries. This was largely due to economic problems, including an inflation rate of 50% and a concern that unemployment might rise. The Sri Lankan Government increased direct taxation. It also encouraged some public sector workers to work abroad temporarily. People who work abroad often send money home to relatives.

Explain two ways that money received from relatives working abroad could raise their families' living standards.

Question 3

[Maximum number: 1]

In one particular year, South Sudan's population growth was 1.3% while its GDP growth was 2%. What is the most likely consequence of this?

A

GDP per capita will decrease

B

the rate of inflation will decrease

C

the standard of living will increase

D

unemployment will increase

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