TMJC 2023 A Level H2 EQ5_AP Answers

2023 A Level H2 Economics (9570) Suggested Answers to Paper 2 EQ5 © TAMPINES MERIDIAN JUNIOR COLLEGE Question 5 Residents in densely populated, rapidly growing cities expect annual improvements in standards of living, but whether this is achievable or sustainable in the long term is uncertain. (a) Explain how improvements in a country’s material and non-material standard of living can be measured. [10] (b) Discuss whether increases in the living standards of residents in densely populated, rapidly growing cities are achievable and sustainable in the long term. [15] Suggested Answer to Part (a): Requirement 1: How improvements in a country’s material standard of living can be measured Standard of living of people in a country refers to their well-being. There are two aspects of standard of living, namely the material well-being and non-material well-being. The material standard of living of the people in a country is determined by the quantity of goods and services enjoyed by an individual. An improvement in a country’s material standard of living can be measured by the rate of growth of real GDP per capita. Measuring rate of growth of real GDP Real GDP refer to the value of final goods and services produced within a country measured at constant base year price. By measuring GDP at constant base year prices, its value has been adjusted for price changes. This means that changes to the value of real GDP reflects changes to the volume or quantity of goods and services produced and not changes in the price level since it is kept constant at the price prevailing in the base year. Real GDP growth rate in 2022 = [Real GDP2022 – Real GDP2021] / Real GDP2021 x 100% If the real GDP growth rate in 2022 for a country is 3.6% for instance, it means that the volume or quantity of goods and services produced within the country grew by 3.6% in 2022 compared to 2021. However, a rise in quantity or volume of goods and services produced does not necessarily imply an improvement in the quantity or volume of goods enjoyed by an individual if the number of residents in the country rose faster. Hence it is necessary to consider the population growth rate when measuring improvements in material standard of living.

2023 A Level H2 Economics (9570) Suggested Answers to Paper 2 EQ5 © TAMPINES MERIDIAN JUNIOR COLLEGE Measuring rate of growth of real GDP per capita Population growth rate in 2022 = [Population2022 – Population2021] / Population2021 x 100% If the population growth rate in 2022 for the country is 0.1% for instance, it means that Population2022 is 0.1% larger than Population2021. Since population growth rate < real GDP growth rate → ↑real GDP per capita as real GDP per capita grew at 3.6% - 0