Macroeconomic Objectives (DP IB Economics: HL)

Extract A, Paragraph 2

Peru experienced significant economic changes in 2023 as mining sector investments boosted productive capacity. New technology in copper extraction increased worker productivity by 40%, while environmental regulations improved resource management. The central bank projected that these structural changes would permanently alter the economy's output potential. However, environmental groups expressed concerns about the long-term sustainability of rapid resource exploitation.

Extract C, Paragraph 3

Finland implemented significant labour market reforms in 2023, reducing the minimum wage for workers under 25 by 20%. The government argued this would boost youth employment, while critics warned about increased income inequality. Initial data showed youth employment increased by 15%, though average wages for young workers changed significantly. Several industries reported increased hiring of younger workers, while labour unions expressed concerns about the long-term implications for wage standards.

Extract A, Paragraph 2

Vietnam experienced strong economic growth in 2023, with GDP expanding at 8.5% as manufacturing output surged. However, inflation reached 7%, significantly above the central bank's 2% target. Labour shortages emerged in key industrial zones as unemployment fell to 2.1%, leading to wage increases of 15% across manufacturing sectors. The State Bank of Vietnam faced pressure to control inflation while maintaining growth momentum. Several economists warned about the economy potentially overheating.

Extract B, paragraph 1

Ecuador's government prioritised rapid debt reduction in 2023, implementing severe spending cuts and tax increases. Public investment fell by 40%, while environmental protection budgets were slashed by 60%. GDP growth slowed to 1% though debt-to-GDP ratios improved. The Ministry of Environment reported increased deforestation and water pollution as regulatory oversight decreased. Several economists noted the growing tension between fiscal consolidation and environmental sustainability.

Extract B , Paragraph 1

South Korea faced significant cost pressures in 2023 as global energy prices doubled following supply disruptions. Manufacturing costs increased by 25% as firms struggled with higher input prices. The won's depreciation further increased imported raw material costs. Several industries reported having to pass these cost increases on to consumers, leading to higher retail prices. The Bank of Korea noted that these supply-side pressures were creating significant inflation despite weak consumer demand.

Extract A, Paragraph 2

Indonesia experienced significant price pressures in 2023 as consumer spending surged following a major government infrastructure programme. The economy was already operating near full capacity when additional stimulus measures were implemented. The central bank noted that output had exceeded the economy's sustainable capacity, with the inflation rate reaching 7.5%, well above the target rate of 2%.