IB Economic Growth

The graphs show how consumer prices and real GDP changed in a country between 1995 and 2005. Which conclusion may be drawn from the graphs?

• Living standards remained roughly constant between 1995 and 2005.

• The level of GDP was lower in 2005 than in 2000.

• The country experienced continuous economic growth between 1995 and 2005.

• The price level fell between 2000 and 2003.

Which cause of economic growth would involve the least cost for present and future generations of a country’s population?

• increased exploitation of a country’s mineral resources

• investment financed by borrowing from abroad

• investment financed by high rates of domestic savings

• technological innovations in productive processes

Which combination of factors is most likely to result in economic growth?

• an increase in management productivity together with a reduction in the hours worked per employee

• increased educational enrollment together with an increase in business regulation

• the discovery of a new raw material deposit together with significant emigration of labour

• the invention of a technology together with the investment to use it in the economy

Between 2000 and 2004 Botswana experienced economic growth but there was a fall in its

Human Development Index.

Which combination of events could explain this apparent paradox?

• A

• B

• C

• D

What will directly result in an increase in China's Gross National Product?

• increased wages earned in a Malaysian-owned factory in China

• increased imports of goods and services

• increased outflows of net property income

• increased taxes on domestic expenditure

The diagram shows a Lorenz curve, with two areas, X and Y, identified. How is the corresponding Gini coefficient calculated?

• X divided by (X plus Y)

• X plus Y divided by X

• X plus Y divided by Y

• Y divided by (X plus Y)

Between 2014 and 2015 the Polish economy expanded at a rate of 3.3%.What necessarily follows from this statement?

• There was increased demand which caused inflation.

• The cost of living rose by 3.3%

• There was positive economic growth

• The output of the industrial sector rose by 3.3%

The graphs indicate economic performance in a country between 2011 and 2014.

Which conclusion may be drawn from the graphs?

• Between 2011 and 2012 industrial production and GDP fell but prices rose.

• Between 2012 and 2013 the rates of growth of industrial production, GDP and prices all increased.

• GDP and industrial production were at their lowest in 2012.

• At no time between 2011 and 2014 did industrial production, GDP or prices fall.

What will result in the short run from rising unemployment in an economy?

• The government’s budget deficit will fall.

• Any existing inflationary pressure will be reduced.

• Potential output will fall.

• The economy’s production possibility curve will shift inwards

In 1979 in the UK the marginal rate of income tax imposed on the highest earners was 83% which increased to 98% if income was received from interest or dividends. By 1989 the highest marginal rate was reduced to 40%. Despite this reduction, the tax revenue raised from the highest earners increased substantially. Which theoretical concept illustrates this relationship between tax rates and tax revenue?

• Laffer curve

• Lorenz curve

• Marshall condition

• Keynesian AD/AS curve