YIJC 2024 JC2 H2 Prelim Essay Q4 Suggested Answer

1 Q4 Governments frequently strive to improve standard of living for their citizens. This is often done through policies designed to stimulate economic growth. a) Explain how an increase in real GDP per capita can indicate an improvement in standard of living. [10] b) Discuss the extent to which supply -side policies will lead to a n improvement in standard of living. [15] Question Analysis: a) Explain how an increase in real GDP per capita can indicate an improvement in standard of living. [10] Command Explain how (Process) Content Increase in real GDP per capita can indicate an improvement in standard of living. Context Generic Trigger Increase in real GDP per capita End can indicate an improvement in standard of living. Requirements 1) an increase in real GDP per capita can indicate an improvement in material standard of living. 2) an increase in real GDP per capita can indicate an improvement in non- material standard of living. Paragraph Development: Point An increase in real GDP per capita can often indicate an improvement in material standard of living in an economy. Example In 2000, China has an estimation of around 1000USD of real GDP per capita (2017) and by 2022, it has increased to around 13000 USD real GDP per capita (2017). In 2022, Chinese consumers contributed around 17 percent of the global personal luxury goods market. It was estimated that the figure would reach 21 percent to 23 percent in 2023. Back in 2000, Chinese consumers' spending on personal luxury goods accounted for merely one percent of the global expenditure. https://www.statista.com/statistics/1087872/china-consumer-spending-share-in-global-luxury- market/ Economic Analysis The increase in real GDP per capita indicates: - Increase in national income after consideration of inflation rate and population size

2 - Offers an average value of the national income of the population (Total national income can be adequately divided by the entire population to have a clearer indication of the average value of the national income for each individual) - Indicates the purchasing power of the average population given considerations of the inflation rate of the economy (Inflation which shows an increase in general price level of goods and services will affect the ability to consume with the given income, when using real GDP per capita, provides clarity in the real value of the amount of goods and services that one c