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% - 0.1% ≈ 3.5% How rate of growth of real GDP per capita measures improvement in material SOL Rate of growth of real GDP per capita in 2022 = 3.5% → each person on average enjoys 3.5% increase in the volume of goods and services in 20 22 compared to 20 21 → improvement in material SOL in 2022 compared to 2021, assuming that income inequality in the country is fairly low as captured by the Gini coefficient which measures income distribution and takes values between 0 to 1 where 0 represent perfect income equality and 1 represents perfect income inequality. Requirement 2: How improvements in a country’s non-material standard of living + SOL as a whole can be measured The non-material standard of living of the people in a country is their quality of life in the country and is influenced by environmental factors such as degree of urban crowding and crime rates, as well as by socio -economic factors such as life expectancy, availability of health care and quantity of leisure. An improvement in a country’s non -material standard of living can be measured by indicators such as Gini coefficient and infant mortality rate. Gini coefficient A decrease in a country’s Gini coefficient over time represents a reduction in income inequality over time. Th e chasm between the rich and the poor narrows leading to decreasing sentiments of social discontent. This is further reinforced when the economy as a whole grows in prosperity and the gains in growth and income are increasingly trickled down to the lower rungs of society. This could result in lower levels of social unrest and crime rates over time as even the lower income groups are able to make ends meet. Everyone feels safer and quality of life improves. In addition, as the lower rungs of society gradually have the means to afford legal housing in the vicinity of where they work or receive education, squatter settlements at the peripheries of cities and urban crowding will diminish rendering living conditions more optimal and improving quality of life. Hence a fall in Gini coefficient could imply an improvement in non-material standard of living, and therefore be a measure of improvements in a country’s non-material standard of living. Infant mortality rate The infant mortality rate is measured as number of deaths of children under one year of age, expressed per 1 000 live births. A fall in the infant mortality rate in a country is another measure of improvements in a country’s non -material standard of living. Decreasing levels of infant mortality rate are associated with better access to healthcare and nutrition over time, more optimal living conditions including better sanitation and higher levels of

2023 A Level H2 Economics (9570) Suggested Answers to Paper 2 EQ5 © TAMPINES MERIDIAN JUNIOR COLLEGE education, implying improvements over time in the quality of life experienced by the residents of a country. Hence decreasing infant mortality rate is a measure of improvements in non-material standard of living in a country. HDI as a composite indicator to measure SOL as a whole Changes in c omposite indicators such as Human Development Index (HDI) which considers purchasing power parity adjusted real income per capita, literacy rate and life expectancy will allow a more informed reflection of standard of living as whole over time. The numerical value varies from 0 to 1 where 1 is best possible score and zero is lowest possible score. The HDI considers not only real income per capita but also life expectancy and literacy rate because the wellbeing of the people in a country is influenced not only by the goods and services available to them but also by their ability to lead a long and healthy life and to acquire knowledge. Hence a rise in a country’s HDI could be a measure of improvements in material and non-material SOL holistically. L3 Thorough address of both requirements / Thorough address of 1 requirement + Cursory address of the other. Answer is thorough, precise, logical, well-reasoned using theory. 8 – 10 L2 Thorough address of 1 requirement / Cursory address of both requirements. Answer is relevant to the question, but theory is incompletely explained. 5 – 7 L1 Both requirements hardly addressed / Cursory address of 1 requirement. Some knowledge shown but does not indicate that the meaning &/or requirements of the question has been properly grasped. Basic errors of theory or an inadequate development of analysis. Mostly irrelevant and only contains a few valid points made incidentally in an irrelevant context. 1 – 4

2023 A Level H2 Economics (9570) Suggested Answers to Paper 2 EQ5 © TAMPINES MERIDIAN JUNIOR COLLEGE Suggested Answer to Part (b): Requirement 1: Increases in material living standards of residents in densely populated, rapidly growing cities are achievable and sustainable in the long term Densely populated and rapidly growing cities are char