Text A, Paragraph 2
The COVID-19 pandemic has highlighted the issue of scarcity in healthcare systems worldwide. Many countries struggled to allocate limited hospital beds, ventilators, and vaccines among an overwhelming number of patients.
Define the term scarcity indicated in bold in the text (Text A, Paragraph 2).
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Text B, Paragraph 1
As developing nations industrialise, they often face a trade-off between producing consumer goods for immediate use and investing in capital goods for future growth. This decision impacts their economic trajectory for years to come.
Draw a Production Possibilities Curve showing the trade-off between consumer goods and capital goods for a developing economy.
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Text C, Paragraph 3
The rise of the gig economy has transformed how factors of production are utilised. Companies like Uber and Airbnb allow individuals to use their personal cars and homes as productive assets.
State two factors of production mentioned in (Text C, Paragraph 3).
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Text D, Paragraph 1
When the EU decided to invest heavily in COVID-19 vaccine development, it faced significant opportunity costs. Investment in the Hyperloop Transportation system was reduced.
Define the term opportunity cost indicated in bold (Text D, Paragraph 1).
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Text A, Paragraph 1
The global supply chain crisis of 2021 demonstrated the high level of interdependence in the modern economy. A shortage of microchips in Taiwan led to production slowdowns in car factories across North America and Europe.
Define the term interdependence indicated in bold in the text (Text A, Paragraph 1).
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Text A, Paragraph 3
South Korea's dramatic economic growth in the late 20th century was marked by a significant outward shift in its production possibilities curve. The country's productive capacity expanded across multiple sectors.
State two factors that can cause an outward shift of the production possibilities curve.
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Text B, Paragraph 2
Additional reforms include upgrading old infrastructure and offering incentives to private sector firms to invest in projects that will improve productive capacity. Some government policies are already being implemented. These include a large power plant construction programme, tax incentives to infant industries such as oil refining to help attract more investment, and tax cuts for industries like transport, telecommunications, metal production and agricultural processing.
Draw a production possibilities curve (PPC) diagram to show the effect of the introduction of the large power plant construction programme on Indonesia’s potential output (Text B, paragraph 2).
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Text A, Paragraph 1
Germany recently experienced a surge in skilled labour due to immigration policies attracting foreign talent. At the same time, significant technological advancements in manufacturing have improved productivity. Policymakers are optimistic that these changes will allow the country to change output across various sectors.
Using a PPC diagram, explain how an increase in skilled labour and technology might impact Germany's production possibilities curve
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Text B, Paragraph 2
Following severe droughts and soil depletion, Ethiopia's agricultural output has been affected by the availability of resources for food production. Local officials worry that if environmental conditions do not improve, the country’s ability to produce other essential goods may also be compromised. Environmental analysts are concerned that limited resources will affect both agricultural and industrial sectors.
Using a PPC diagram, explain how environmental damage might impact Ethiopia's production possibilities curve.
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Text D, Paragraph 4
Turkey has decided to boost its defence sector, aiming to enhance national security. This policy requires shifting resources from other sectors, including healthcare and education. Economists argue that while security may improve, the reduced focus on healthcare and education could impact living standards. The decision has sparked debate on whether increased defence spending justifies the opportunity cost.
Using a PPC diagram, explain the opportunity cost associated with Turkey's defence spending.
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Text C, Paragraph 1
To address recent economic uncertainty, Japan's government is encouraging domestic savings by offering incentives for households to save more. The government hopes that by increasing savings, banks will have more funds to lend to businesses. Officials are optimistic that this policy will provide long-term benefits by supporting business growth, but some economists suggest otherwise.
Using a circular flow of income diagram, explain how an increase in household savings might impact economic activity in Japan.
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Explain the relationship between scarcity and sustainability in economics.
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Explain the interdependence between economic decision-makers in an economy.
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Explain how the basic economic questions are addressed in different economic systems.
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