Cambridge A Level Economics: Economic development and measuring living standards (9708) – Practice Questions

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs – examination boards hold copyright in their own papers. Use these alongside the official past papers from your board or school.

These questions cover section 11.3 (Economic development), outcomes 11.3.1 to 11.3.4, of the Cambridge International AS & A Level Economics 9708 syllabus for examination in 2026, 2027 and 2028. Topic 11 is A Level content only. All countries and figures are invented, and money is in currency units (cu). Read the study guide and revision notes first. The course hub and checklist show the rest of the syllabus.

Questions

1. State three non-monetary indicators that can be used to compare living standards between countries. [3]

2. Country A has nominal GDP of 150 cu bn, a price index of 125 (base year 100) and a population of 5 million. Calculate real GDP per capita. [3]

3. Country B has GDP of 90 cu bn, net property income from abroad of plus 6 cu bn, capital consumption of 9 cu bn and a population of 3 million. Calculate (a) GNI and (b) net national income (NNI) per capita. [4]

4. A basket of goods costs 40 cu in Country C and 2,600 units in Country D. The market exchange rate is 50 units per cu. GDP per capita in Country D is 195,000 units. (a) Calculate Country D’s GDP per capita in cu at the market rate and at purchasing power parity (PPP). [3] (b) Explain why the two figures differ. [2]

5. Explain two reasons why GDP per capita may be a poor guide to living standards. [4]

6. (a) A person is deprived in sanitation, drinking water, electricity, cooking fuel and housing, and in no other indicator. Each living-standards indicator has weight 1/18. Decide whether the person is poor on the Multidimensional Poverty Index (MPI), where the poverty threshold is a weighted score of 1/3. [2] (b) In a country 24% of people are poor and their average deprivation is 50%. Calculate the MPI. [2]

7. Country E has life expectancy 66 years, expected schooling 12 years, mean schooling 6 years and income of 4,000 cu PPP. Assume these limits: life expectancy 25 to 85, expected schooling 0 to 18, mean schooling 0 to 15, income 500 to 60,000 cu. (a) Calculate the Human Development Index (HDI) for Country E, using the geometric mean of the three dimension indices and a logarithm of income. [5] (b) Explain why the income index uses a logarithm. [2]

8. Country A has GDP of 120 cu bn and a population of 4 million. Household production is valued at 14 cu bn and leisure at 10 cu bn. Regrettable necessities cost 9 cu bn and pollution costs 7 cu bn. (a) Calculate the Measure of Economic Welfare (MEW). [2] (b) Calculate MEW per capita and GDP per capita. [2] (c) State one limitation of MEW. [1]

9. A study of four invented countries shows the Gini coefficient by income band: low income 0.32, lower-middle 0.41, upper-middle 0.47, high income 0.39. (a) Describe the pattern. [2] (b) Explain why inequality might fall at higher income levels. [2] (c) Explain two reasons why the pattern may not hold for every country. [2]

10. Country F has real GDP per capita of 4,000 cu growing at 5% a year. Country G has 24,000 cu growing at 1.5% a year. (a) Calculate real GDP per capita in each country after 20 years. [2] (b) Calculate the change in the absolute gap and the ratio of G to F. [2] (c) Comment on what this shows about comparing growth rates. [2]

11. Explain the difference between classifying economies by national income and classifying them by level of development. [4]

12. Evaluate whether a rise in real GDP per capita shows that living standards have improved. [10]

Answers

1. One mark each for any three, for example life expectancy [1], infant mortality [1] and adult literacy [1]. Other acceptable indicators include school enrolment, access to clean water or sanitation, doctors per thousand people and electricity access. [3] Examiner insight: name measurable outcomes, not general ideas. “Health” alone is a dimension, while “life expectancy at birth” is an indicator.

2. Real GDP = 150/1.25 [1] = 120 cu bn [1]. Per capita = 120 bn/5 m = 24,000 cu [1]. [3] Examiner insight: writing the deflation step down matters, because dividing by 125 instead of 1.25 or skipping the population step makes it hard to give credit for the rest.

3. (a) GNI = 90 + 6 = 96 cu bn [1]. (b) NNI = 96 - 9 = 87 cu bn [1]. Per capita = 87 bn/3 m [1] = 29,000 cu [1]. [4] Examiner insight: NNI is built from GNI, not GDP, and a candidate who subtracts depreciation from GDP only has missed the net income term.

4. (a) PPP rate = 2,600/40 = 65 units per cu [1]. Market-rate income = 195,000/50 = 3,900 cu [1]. PPP income = 195,000/65 = 3,000 cu [1]. (b) The basket costs 52 cu at the market rate in Country D, above 40 cu in Country C, so prices are higher in D [1]. Converting at the market rate therefore overstates what D’s income buys, and PPP income is lower [1]. [5] Examiner insight: the direction matters. A comparison that says only “they differ because of prices” does not show which country is dearer or why PPP is lower here.

5. Any two reasons, each worth a point and its development. Example one: GDP per capita is an average, so a rise can go to a few people while most gain nothing [1]; this can overstate the living standards of typical households [1]. Example two: GDP omits unpaid household work and the informal economy [1], so the real level of output and welfare is understated, especially in poorer countries [1]. [4] Examiner insight: name a limitation, then say which way it distorts the comparison. A list of omitted items with no consequence earns less than two developed points.

6. (a) Score = 5 x 1/18 = 5/18 = 0.278 [1]. This is below 1/3, so the person is not MPI-poor, despite five deprivations [1]. (b) MPI = H x A [1] = 0.24 x 0.50 = 0.12 [1]. [4] Examiner insight: compare the score with 1/3 explicitly. Five deprivations looks like poverty, and the conclusion has to follow from the weights.

7. (a) Health = (66 - 25)/60 = 0.683 [1]. Education = (12/18 + 6/15)/2 = (0.667 + 0.4)/2 = 0.533 [1]. Income = ln(4,000/500)/ln(60,000/500) = 2.079/4.787 = 0.434 [1]. HDI = (0.683 x 0.533 x 0.434)^(1/3) [1] = 0.541 [1]. (b) Extra income adds less welfare at high income [1], so the logarithm gives smaller index gains for each extra cu as income rises [1]. [7] Examiner insight: keep unrounded values until the final step. Rounding each index early can shift the third decimal of the HDI.

8. (a) MEW = 120 + 14 + 10 - 9 - 7 [1] = 128 cu bn [1]. (b) MEW per capita = 128 bn/4 m = 32,000 cu [1]. GDP per capita = 120 bn/4 m = 30,000 cu [1]. (c) Valuing leisure, household work or pollution is subjective, so MEW is hard to compare across countries [1]. [5] Examiner insight: “it is hard to measure” is too thin. Say what has to be valued and why that valuation is contestable.

9. (a) Inequality rises from 0.32 to 0.47 as income moves from low to upper-middle [1], then falls to 0.39 at high income, an inverted U [1]. (b) Higher income allows more tax revenue and welfare spending [1], and education spreads, narrowing wage differences [1]. (c) The pattern is from a few cases and does not set out a rule [1]. Policy choices, such as land reform or progressive taxes, can change inequality at any income level [1]. [6] Examiner insight: quote values from your data in the description. Naming an inverted U with no values may not show that you read it.

10. (a) F = 4,000 x 1.05^20 = 10,613 cu [1]. G = 24,000 x 1.015^20 = 32,325 cu [1]. (b) Gap rises from 20,000 to 21,711 cu (unrounded values) [1]. Ratio falls from 6.0 to 3.05 [1]. (c) Higher growth in F narrows the relative gap but the absolute gap still widens [1], so catching up depends on starting level and takes decades [1]. [6] Examiner insight: give both the absolute and the relative gap. One measure alone can support the opposite conclusion.

11. Classification by national income uses one measure, usually GNI per capita, to place countries in bands [1]. It is simple and comparable [1]. Classification by development uses several features, such as health, education and economic structure [1], so two countries in one income band can fall into different development groups [1]. [4] Examiner insight: the contrast has to be explicit. A paragraph describing each in turn without comparison is weaker than one that contrasts them directly, for example with the word “whereas”.

12. Indicative points, one mark each. For: real GDP per capita removes price rises and population change [1]; higher income allows spending on food, health and education [1]; it usually correlates with life expectancy and schooling [1]. Against: it is an average, so distribution may be unchanged or worse [1]; output may come with pollution or resource depletion [1]; unpaid work and informal activity are missed [1]; the composition of output matters [1]. Evaluation: compare it with HDI, MEW or MPI, which adjust for these gaps [1]; the importance of each limit depends on the country, so judge with data on inequality and health [1]; a justified conclusion, such as that it is a necessary but not sufficient indicator [1]. [10] Examiner insight: answers that list limits without weighing them stay descriptive. Reach a conclusion and say what evidence would change it.

Where marks are usually lost

• Dividing by 125 instead of 1.25 when deflating nominal values.
• Using total GDP instead of a per capita figure for living standards.
• Applying the PPP rate the wrong way round.
• Treating five MPI deprivations as automatic poverty without weighting.
• Rounding the HDI dimension indices too early.
• Naming a limitation of GDP without saying which way it distorts.
• Presenting the Kuznets pattern as a law.
• Comparing growth rates without the starting levels or the absolute gap.

Next steps

• Revise with the revision notes and re-read the study guide.
• Use the course hub and checklist.
• Try all free 10-minute diagnostics.
• Book a free trial class.

Official syllabus

Cambridge International AS & A Level Economics 9708, syllabus for examination in 2026, 2027 and 2028, published by Cambridge University Press & Assessment (Cambridge International Education), section 11.3.