IBDP Economics 3.1 Measuring economic activity and illustrating its variations HL Paper 1 - New Syllabus
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.