CIE IGCSE Topical Past Paper 2

4.6 Economic growth

Return to topics list

0455/22/M/J/24 

Tajikistan is one of Asia’s low-income countries. Its currency, the somoni, has the key characteristics of money. More than one million Tajik people work abroad, mostly in Russia. In 2020, the Tajik government was concerned that the country’s economy might experience a recession which could cause a fall in tax revenue. Despite this possibility, some Tajik firms bought new capital equipment.

a) Identify two reasons why tax revenue is likely to fall during a recession. [2] 

0455/21/O/N/23 

Malaysia once specialised in the production and export of natural rubber. The production of natural rubber was very labour‑intensive. However, despite still being in the top 5 of natural rubber exporters in the world, Malaysia has moved towards producing manufactured goods that use natural rubber instead of just producing and exporting this primary product. 

d) Discuss whether or not labour‑intensive production will harm an economy. [8] 

0455/23/O/N/22 

Palau is a small island country in the Pacific Ocean. It has received considerable financial support from the US. Living standards are thought to be lower in Palau than in the US. Palau imposes some of the highest tariffs in the world. These trade tariffs affect Palau’s current account of its balance of payments. In 2019, commercial bank lending to firms and households in Palau increased. 

d) Discuss whether or not an increase in commercial bank lending will increase economic growth. [8] 

0455/21/O/N/22 

Bulgaria is part of the European Union (EU), but it has much lower corporation tax rates than other EU members. However, regulation by the Bulgarian government has discouraged foreign investment into Bulgaria. In addition, Bulgaria’s economic growth rate has decreased in recent years, due in part to a steady fall in its quantity of labour .

d) Discuss whether or not a decrease in a country’s economic growth rate will harm its economy. [8] 

0455/21/M/J/22 

Australia’s foreign exchange rate fluctuates. The value of Australia’s exports is regularly greater than the value of its imports. Australia is Papua New Guinea’s main trading partner. In 2019, the government of Papua New Guinea increased income tax to reduce its inflation rate. It used other policy measures to increase its economic growth rate. 

d) Discuss whether or not governments should aim for a high rate of economic growth. [8] 

0455/23/M/J/21 

Global spending on the health sector, by both the private and public sectors, is the highest compared with all other sectors including education and defence. Investment in education and the health sector has resulted in new life-saving technology being introduced. However, demand for certain vaccinations has decreased over the years, shifting the demand curve of vaccinations to the left. 

a) Define investment. [2]