CAMBRIDGE INTERNATIONAL AS & A LEVEL ECONOMICS: COURSEBOOK ANSWERS
Exam-style questions and sample answers have been written by the authors. In examinations, the way marks are awarded
may be different.
Coursebook answers
Chapter 50
Economics in context
Learners’ discussion might include:
• Learners’ own answers.
• In some countries, information is produced on quality of life adjusted years as people who experience
poor health may not enjoy living longer.
Activities
Activity 50.1
Learners’ own answers.
Activity 50.2
1 There is some positive correlation but it is not consistent. Europe has the most years of schooling and
the highest GNI per capita. South Asia and Sub-Sahara Africa appear 5th and 6th in both columns.
However, Latin America comes 2nd in terms of education but only 4th in terms of income. The Arab
states and East Asia and the Pacific are also in a different order.
It would be expected that there would be a positive correlation as more years of schooling is likely to
lead to a more productive labour force.
2 Yes, Sub-Saharan Africa had the lowest HDI value, the fewest years of education, the lowest life
expectancy and the lowest income per head.
Activity 50.3
Learners’ answers might include:
1 Health poverty can be measured in the MPI by examining child mortality and nourishment data.
2 For example, poor housing and only a few years of schooling.
3 A lack of education is an important indicator of poverty as it indicates that people are not able to
educate their children or that the country does not have the resources to provide state education free to
parents and their children. It also suggests that those who do not get much education are unlikely to be
able to gain a highly-paid job.
Think like an economist
Learners’ discussion might include:
1 Among the range of policy tools are increased government spending on healthcare, education and
training, increased state benefits, anti-discrimination legislation and a progressive tax system.
2 Learners’ own answers.
1 Cambridge International AS & A Level Economics - Bamford & Grant © Cambridge University Press 2021
CAMBRIDGE INTERNATIONAL AS & A LEVEL ECONOMICS: COURSEBOOK ANSWERS
Activity 50.4
Learners’ own answers.
Exam-style questions: Multiple choice
1 A If income has become more unevenly distributed, it is possible that most people may not have
benefited from the higher income. B would mean that real income has risen, which will be more
beneficial than just a rise in nominal income. C would result in a rise in GNI per head. D would be
likely to increase the quality of life, at least in the short run.
2 D Country D is likely to have the highest level of development as it has the highest income per head,
the joint highest % of the population with access to the internet and the smallest percentage of the
population who are homeless.
3 A This is a definition of purchasing power parity. D is a definition of the real exchange rate. In
the case of B, a floating exchange rate may move to a position where there is equilibrium on the
current account of the balance of payments. In the case of C, there is no exchange rate which will
ensure that incomes in two trading partners are equal.
4 A A decrease in the death rate is likely to be associated with an increase in life expectancy. A higher
life expectancy would increase the HDI value. An increase in emigration is likely to reduce output
by more than population as emigrants are often of working age. A reduction in average years of
schooling would directly reduce the HDI value and a recession would reduce the HDI value as it
will lower GNI per head.
5 D Over time, life expectancy increases in most countries. If life expectancy stays the same in one
country, it is likely to be overtaken by other countries. Expected years of schooling is usually
greater than mean years of schooling as the number of years of schooling usually increases over
time. If GNI falls by less than population, it means that GNI per capita has increased which may
have caused a rise in relative development. Income distribution is not included in HDI.
6 B High productivity can result in high income per head. The other three characteristics are more
likely to be found in a country with low development. A country with high development will be
likely to have high income per head, high investment and a high literacy rate rather than a high
illiteracy rate.
7 B Sanitation is one of the indicators of living standards in the MPI. It does not appear in the HDI.
Leisure time appears in MEW but not in either MPI or HDI. Years of schooling appears in both
MPI and HDI. Tax revenue does not appear as an item in either MPI or HDI.
8 C While HDI takes GNI per head into account, MEW starts with GDP.
9 D An increase in income per head will directly increase HDI and MEW. It is likely to decrease MPI
as for example health and nutrition are likely to improve.
10 D The Kuznets curve suggests that as countries develop, income inequality first increases, peaks and
then decreases. The initial rise in inequality could be seen as unfair. A is the Phillips curve, B the
J curve and C is an environmental Kuznets curve.
2 Cambridge International AS & A Level Economics - Bamford & Grant © Cambridge University Press 2021
