Measuring economic activity and illustrating its variations Paper 1| IBDP Economics HL |

IBDP Economics HL – Macroeconomics – Measuring economic activity and illustrating its variations -Paper 1 Exam Style Practice Questions

Exam Style Questions..

IBDP Economic SL- All Topics

Question

Discuss the view that, apart from indicating economic growth rates over time, national income statistics are of little use.

▶️Answer/Explanation

Answers may include:

definitions of economic growth, growth rate, (real) GNI/GNP (per capita), (real) GDP (per capita)
a diagram is not required but candidates may use diagram(s) to show economic growth, inequality in the distribution of income
explanation of the uses of national income statistics for making comparisons over time, for making comparisons between countries and for making conclusions about the standards of living
examples of such uses in practice
synthesis or evaluation (discuss).

Question

Explain the impact that a cut in taxation and an increase in government spending might have on the circular flow of income.

▶️Answer/Explanation

Answers may include:

definitions of the circular flow of income (model), (indirect/direct) taxation, government spending
diagram of the circular flow of income showing injections and leakages
explanation of the impact a cut in taxation and an increase in government spending will have on the circular flow of income, with leakages being reduced and injections being increased, resulting in an increased (flow of) income, ceteris paribus
example(s) of expansionary fiscal policy in practice.

Question

Discuss whether the real gross national income (GNI) per capita of a country is a good indicator of its standard of living.

▶️Answer/Explanation

Answers may include:

definition of real GNI(GNP) per capita
a diagram is not required for full marks, but candidates may use diagram(s) to show inequality in the distribution of income, negative externalities in production/consumption,economic growth
explanation why the real GNI per capita might be regarded as a good indicator of the standard of living, such as higher average income leading to higher consumption, greater tax revenue for public services, less poverty
examples of countries with different GNI per capita resulting in different standards of living and/or countries where there is discrepancy between the standard of living and the level of real GNI per capita
synthesis or evaluation (discuss).

Question

Discuss whether the real gross national income (GNI) per capita of a country is a good indicator of its standard of living.

▶️Answer/Explanation

Answers may include:

definition of real GNI(GNP) per capita
a diagram is not required for full marks, but candidates may use diagram(s) to show inequality in the distribution of income, negative externalities in production/consumption,economic growth
explanation why the real GNI per capita might be regarded as a good indicator of the standard of living, such as higher average income leading to higher consumption, greater tax revenue for public services, less poverty
examples of countries with different GNI per capita resulting in different standards of living and/or countries where there is discrepancy between the standard of living and the level of real GNI per capita
synthesis or evaluation (discuss).