IBEconomicsDPHLExam Questions3. Macroeconomics3.1 Measuring Economic Activity

Measuring Economic Activity (DP IB Economics: HL)

Exam Questions

14 mins7 questions
12 marks

Text A, Paragraph 1

With a population of 273 million people, Indonesia is the 4th largest country in the world, recently emerging out of the COVID-19 pandemic with growth accelerating to 3.7% in 2021. This growth is forecast to reach 5% by the end of 2022, a return to pre-pandemic levels. Indonesia’s president, in power since 2014, has implemented what is hoped to be a bold new package of economic reforms, coined the ‘going for growth plan’. Included within this package are measures aimed at increasing global competitiveness, creating new jobs, and educating one of the world's youngest workforces. With GDP per capita (US$ PPP) steadily rising to 11,555 in 2021, the population on average is becoming richer. Opponents of the current government, however, point to the slow progress in improving inequality and poverty across the economy.

Table 2: Indonesian development statistics

N/A
Table 2

Using information from Text A, paragraph 1 and/or Table 2, calculate the GDP in US$ PPP for Indonesia for 2021.

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22 marks

Text A, Paragraph 1

Ghana, located in West Africa, is one of the fastest-growing economies in the region, with $72.8 billion GDP in 2021, up from $32.3 billion in 2011. The country's economy is diversified, with sectors ranging from agriculture and mining to manufacturing and services.

Using information from (Text A, Paragraph 1), calculate the GDP growth rate for Ghana between 2011 and 2021.

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32 marks

Text A, Paragraph 2

Cambodia has achieved consistent strong economic growth with, from 2011 to 2019, an average annual real GDP growth rate of around 7%. Thanks to garment exports and tourism it is one of the fastest-growing economies in the world. However, due to the impact of the COVID-19 pandemic, Cambodia's economy contracted by 3.1% in 2020.

Define the term real GDP indicated in bold in the text (Text A, Paragraph 2).

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42 marks

Text B, Paragraph 1
The government of India has implemented new policies to stimulate the economy, focusing on increasing the circular flow of income. This includes measures to boost investment and government spending, which are expected to enhance economic activity across various sectors.

Define the term circular flow of income as indicated in (Text B, Paragraph 1).

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52 marks

Text C, Paragraph 2
As part of its economic stimulus package, Japan has increased government spending to stimulate demand and production. Economists are closely monitoring how this will impact the overall circular flow of income and whether it will lead to sustainable growth.

Outline the role of government spending in the circular flow of income, as found in (Text C, Paragraph 2).

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62 marks

Text C, Paragraph 3
A recent study comparing living standards between the USA and China utilised Purchasing Power Parity (PPP) to adjust for differences in the cost of goods and services. This method provides a clearer comparison of how far incomes go in different economies.

Define the term Purchasing Power Parity (PPP) as indicated in (Text C, Paragraph 3).

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72 marks

Text D, Paragraph 3:
Using GDP as a measure of well-being has limitations, as it does not capture income inequality, unpaid work, or environmental degradation. Policymakers are now considering alternative metrics to better reflect the overall well-being of a nation.

State two limitations of using GDP to measure well-being, as found in (Text D, Paragraph 3).

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