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 can purchase) - Higher purchasing power - Higher consumption of goods and services (Including the rise in consumption of luxurious goods and services) - Higher satisfaction and utility - Higher material SOL Link to ATQ Generally, an economy experiencing an increase in real GDP per capita will see an improvement in material standards of living (SOL). This is particularly evident in developing economies, where the marginal propensity to consume (MPC) is relatively higher. As real GDP pe r capita rises, these economies tend to experience a more significant increase in consumption of goods and services, leading to a corresponding enhancement in material SOL. Point An increase in real GDP per capita can often indicate an improvement in non- material standard of living in an economy. Example Since 2000, Singapore has enjoyed a real GDP per capita at 24000 USD of real GDP per capita (2017) and till 2022 it has increased to around 83000 USD of real GDP per capita (2017) Singapore’s life expectancy in 2000: 78 years old Singapore’s life expectancy in 2024: 84 years old Singapore’s literacy rate in 2000: 93% Singapore’s literacy rate in 2024: 97% Singapore’s HDI in 2000: 0.831 Singapore’s HDI in 2000: 0.949 Economic Analysis A higher real GDP per capita often indicates: - Higher income level - Higher income tax collection - Higher budget by the government to spend on healthcare and education - Higher literacy rate - Higher life expectancy - Higher quality of life in accordance to HDI that considers life expectancy, literacy rate and national income as a measurement of quality of life

3 - Higher non- material SOL OR - Higher income level - Higher purchasing power - Higher budget by individual to spend on healthcare and education - Higher literacy rate - Higher life expectancy - Higher quality of life in accordance to HDI that considers life expectancy, literacy rate and national income as a measurement of quality of life Link to ATQ An increase in real GDP per capita often signals an improvement in non- material standards of living. This is particularly significant in economies where the government prioritizes societal welfare. Substantial investments in healthcare and education, coupl ed with effective regulation, can lead to marked improvements in non-material standards of living, such as better public health, higher educational attainment, and overall well-being. Markers’ comments: Most students demonstrated the ability to explain the impact of an increase in real GDP per capita on improvements in the standard of living (SOL), effectively addressing both the material and non-material dimensions of SOL. However, many students were unable to achieve the full range of marks for two key reasons: insufficient analysis of the significance of "real" and "per capita" in the implications for SOL, and a lack of examples or contextualization to support their explanations. Essentially, there was a ga p in effectively linking their answers to the question.

4 Level Descriptors Marks 3 Expect a good knowledge of the facts and theory of the impact of increase in real GDP per capita on SOL , clear evidence of the ability to use the economic analysis to explain the impact on SOL with accurate reference to the question. Provision of a well-balanced discussion where the impact is on both material and non- material SOL. [8 – 10] [A+A: 10] [A+C: 8-9] 2 Expect an accurate although undeveloped explanation of the facts relating to the impact of an increase in real GDP per capita on SOL together with an explanation of the theory, and evidence of some ability to discriminate and form elementary judgements. BUT do not expect a clear logical presentation. There will not be much evidence of the ability to recognise unstated assumptions, nor to examine the implications of a hypothesis, nor the ability to organise ideas into a new unity. Max 5: For one set of analysis [5 – 7] [A+K: 7] [C+C: 6-7] [A+0: 6] [K+C: 5-6] 1 Answer shows some knowledge but does not indicate that the meaning of the question has been properly grasped, Basic errors of theory or an inadequate development of analysis may be evident. [1 – 4] [C+0: 4] [K+K: 2-4] [K+0: 1-2]

5 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: Command Discuss (Considerations of both sides of the analysis) Content Extent