O Level Economics: Economic development — Practice Questions (Cambridge 2281)

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 — Cambridge International holds copyright in its own papers. Use these alongside the official past papers available from your board.

Each question practises a skill tested in the June 2024 Paper 22. After each answer there is an examiner insight, a mark-scheme insight or a tip, and the real question to try next.

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Questions

1. In a low-income country, a drought has pushed food prices up and many rural families can no longer afford basic necessities. Explain two ways the government could reduce poverty among these families. [4]

2. A government replaces a flat-rate income tax with a progressive income tax and uses the extra revenue from high earners to fund services for low-income households. Explain whether this policy is mainly aimed at absolute poverty or relative poverty. [2]

3. About one in eight working-age adults from a small island economy work in hotels and on building sites in richer countries. Explain two advantages the island economy may gain from having these citizens working abroad. [4]

4. Explain how having fewer years of education can reduce the amount a person earns over their working life. [4]

5. In a developing country, 60% of workers are employed in farming, fishing and forestry.

(a) Resources used for farming, fishing and forestry are scarce. State two possible opportunity costs of the country producing more of these primary products. (2 marks)

(b) Explain one reason why a country with most of its workers in the primary sector is likely to have a low GDP per head. (2 marks) [4]

6. Country P has a real GDP of $60 billion and a population of 12 million. Country Q has a real GDP of $90 billion and a population of 30 million.

(a) Calculate real GDP per head for each country. (2 marks)

(b) Explain one reason why the country with the higher real GDP per head may not have the higher living standards. (2 marks) [4]

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Answers

1. Two measures, each with identification [1] and explanation [1], for example: providing unemployment or other state benefits [1], so families with no income can still buy food and other basic necessities [1]; cutting indirect taxes on basic foods [1], because these taxes take a bigger share of poor households’ income, so prices of necessities fall [1]; spending more on education and training [1], which raises workers’ skills, productivity and earning potential [1]; setting a maximum price on staple foods [1], keeping necessities affordable [1]; introducing or raising a minimum wage [1], raising the income of the lowest-paid workers [1].

Examiner insight (Cambridge 2281 June 2024 examiner report, Paper 22, Question 2(b)): This skill was generally well answered, with education spending and unemployment benefit the most popular measures. To gain full marks, candidates had to spell out the link between each measure and a reduction in poverty rather than just naming it.

Source for the examiner insights on this page: Cambridge O Level Economics 2281 June 2024 Principal Examiner Report for Teachers, Paper 2281/22 section, paraphrased.

Try the real question next: Cambridge O Level Economics 2281, June 2024, Paper 22, Question 2(b).

2. It is mainly aimed at relative poverty [1]. A progressive tax takes a larger proportion of income from high earners, and spending the revenue on low-income households narrows the gap between rich and poor, so fewer people are poor compared with the average [1]. (It could also reduce absolute poverty if the services lift people above the level needed for basic necessities, but that is not its main aim.)

Mark-scheme insight (Cambridge 2281 June 2024 mark scheme, Paper 22, Question 2(b)): The mark scheme pairs progressive taxes with reducing relative poverty, whereas state benefits and a maximum price on necessities are linked to helping people afford basic necessities.

Source for the mark-scheme insights on this page: Cambridge O Level Economics 2281 June 2024 mark scheme for Paper 22 (2281/22), paraphrased. Cambridge’s 2281 past papers page publishes the Paper 21 mark scheme from this series, not the Paper 22 one.

Try the real question next: Cambridge O Level Economics 2281, June 2024, Paper 22, Question 2(b).

3. Two advantages, each with identification [1] and explanation [1], for example: workers send money home (remittances) [1], raising their families’ incomes and reducing poverty [1]; remittances bring foreign currency into the country [1], recorded as secondary income, improving the current account of the balance of payments [1]; workers gain skills, experience and knowledge of new technology abroad [1], which they bring back, raising productivity or allowing them to set up firms that increase GDP [1]; it may reduce unemployment at home [1] where there are not enough jobs, cutting government spending on unemployment benefit [1].

Examiner insight (Cambridge 2281 June 2024 examiner report, Paper 22, Question 4(c)): Strong answers covered remittances, the current account and the skills workers bring back. Some answers lost focus and wrote about the general effects of net emigration, so keep the focus on people working abroad.

Try the real question next: Cambridge O Level Economics 2281, June 2024, Paper 22, Question 4(c).

4. Logical chain, up to 4 marks, for example: fewer years of education means fewer qualifications and skills [1], so the person is less productive [1] and less likely to be promoted [1]; they are more likely to be employed in low-paid manual work [1] and easier to replace, so have less bargaining power [1]; with fewer skills they are more likely to be unemployed at times [1]; they may know less about healthy living and good healthcare, so may take more time off work through illness [1].

Examiner insight (Cambridge 2281 June 2024 examiner report, Paper 22, Question 3(b)): A number of answers simply said that less-educated people get lower-paid jobs and so earn less. Stronger answers explained the reasons for lower pay, for longer spells of unemployment and for more time off through illness.

Try the real question next: Cambridge O Level Economics 2281, June 2024, Paper 22, Question 3(b).

5. (a) Any two [1] each: manufactured (secondary sector) goods [1]; services (tertiary sector) [1]; wildlife habitats and the quality of the ecosystem, for example forest cleared for farmland [1].

(b) Identification [1], explanation [1], for example: primary sector output such as farming usually has low value added and low labour productivity [1], so output and incomes per worker are low, keeping GDP per head low [1]. Or: primary output depends on weather and world commodity prices [1], so incomes are unstable and often low [1].

Mark-scheme insight (Cambridge 2281 June 2024 mark scheme, Paper 22, Question 2(a)): An opportunity cost is the next-best alternative given up, so the mark scheme credits output of the other sectors (manufactured or capital goods, and services) and also lost wildlife habitats or ecosystem quality.

Try the real question next: Cambridge O Level Economics 2281, June 2024, Paper 22, Question 2(a).

6. (a) Country P: $60 billion ÷ 12 million = $5,000 [1]. Country Q: $90 billion ÷ 30 million = $3,000 [1].

(b) Identification [1], explanation [1], for example: income may be very unequally distributed in Country P [1], so many people could still be living in poverty [1]; Country P’s workers may work much longer hours or suffer more pollution [1], lowering quality of life [1]; GDP per head ignores education and healthcare [1], which may be better in Country Q [1].

Tip: Real GDP per head is an average — always ask who gets the income and what it leaves out (leisure, pollution, health, education). This is why the Human Development Index (HDI) combines income with health and education.

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Where marks are usually lost

• Naming a policy without explaining how it helps the poor — each point needs identification [1] and explanation [1].
• Mixing up absolute poverty (cannot afford basic necessities) with relative poverty (poor compared with others in the same country).
• Writing about emigration in general when the question is about the gains from citizens working abroad.
• Giving money or profit as an opportunity cost instead of the alternative goods or services given up.
• Treating GDP per head as a complete measure of living standards.