OxfordAQA International AS and A-level Economics: Measuring economic development (9640) – 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 3.4.3.1 of the OxfordAQA International AS and A-level Economics (9640) specification, version 1.2: measuring economic growth, development and living standards. Section 3.4 is extra International A2 content. All data are invented. Read the study guide or the revision notes first, and see the OxfordAQA Economics hub, the printable checklist and the free diagnostics.

Questions

1. In Country K, GDP is 1,250 (billion units), income received from abroad is 70, income paid abroad is 130 and capital depreciation is 110.

(a) Calculate Gross National Income. [2] (b) Calculate Net National Income. [1]

2. Country L’s nominal GDP rises from 2,800 to 3,150 while its price index rises from 100 to 108.

(a) Calculate the percentage rise in nominal GDP. [1] (b) Calculate the rate of real economic growth, to one decimal place. [2] (c) Explain why real growth is the main measure of economic growth. [2]

3. Real GDP in Country M rises by 5% and its population by 3%.

(a) Calculate the growth in real GDP per head, to one decimal place. [2] (b) Explain why living standards of a typical household may still not have risen. [2]

4. The same basket of goods costs 450 j-units in Country J and 90 k-units in Country K. The market exchange rate is 8 j-units per k-unit. GDP per head is 60,000 j-units in Country J and 11,000 k-units in Country K.

(a) Calculate the PPP exchange rate. [1] (b) Convert Country J’s GDP per head into k-units at the market rate and at the PPP rate. [2] (c) State which country has the higher GDP per head when PPP is used. [1]

5. A country has HDI dimension indices of 0.48 (health), 0.72 (education) and 0.90 (income).

(a) Calculate its HDI as a geometric mean, to three decimal places. [2] (b) Explain why HDI uses a geometric mean rather than an arithmetic mean. [2]

6. In Country P, 24% of people are MPI-poor and they are deprived in 50% of weighted indicators on average. In Country Q, 40% are MPI-poor and deprivation averages 35%.

(a) Calculate the MPI for each country. [2] (b) Explain what the MPI shows that a simple headcount does not. [2]

7. Country R’s income shares for its five quintiles, poorest to richest, are 5%, 9%, 14%, 23% and 49%.

(a) Calculate the cumulative income shares. [1] (b) Estimate the Gini coefficient, showing your method. [2] (c) Calculate the quintile ratio. [1] (d) State one limitation of this Gini estimate. [1]

8. Over ten years, Country Z records the following.

	Start	End
Real GDP per head (index)	100	148
Infant deaths per 1,000 live births	52	47
Adult literacy rate	60%	61%
Gini coefficient	0.41	0.52

(a) Calculate the percentage fall in the infant mortality rate, to one decimal place. [1] (b) Explain whether the data show economic growth with economic development. [5]

9. Describe three general characteristics that distinguish an emerging economy from a typical LEDC. [3]

10. Explain what is meant by sustainable development and one way in which fast growth could threaten it. [4]

11. Assess whether real GDP per head is a reliable indicator of living standards. [9]

12. Country D has an HDI of 0.81 and an IHDI of 0.64. Country E has an HDI of 0.74 and an IHDI of 0.69.

(a) Calculate the percentage loss in HDI due to inequality for each country. [2] (b) Evaluate which country is likely to offer the better living standards to a typical person. [6]

Answers

1. (a) GNI = GDP + income from abroad − income paid abroad [1] = 1,250 + 70 − 130 = 1,190 [1] (b) NNI = 1,190 − 110 = 1,080 [1] [3] Examiner insight: Writing the formula before substituting shows the method, and the units (billions of currency units) belong in the final line.

2. (a) (3,150 − 2,800) ÷ 2,800 × 100 = 12.5% [1] (b) Real GDP at base prices = 3,150 ÷ 1.08 = 2,916.7 [1]. Real growth = (2,916.7 − 2,800) ÷ 2,800 = 4.2% [1] (c) Nominal GDP can rise through higher prices alone [1]. Real GDP removes inflation, so a rise shows more goods and services produced [1] [5] Examiner insight: An answer that gives 12.5% for part (b) has not used the price index; state that you are deflating before you calculate.

3. (a) 1.05 ÷ 1.03 [1] = 1.0194, so 1.9% [1] (b) GDP per head is an average, so if the gains went mainly to high earners the typical household gains little [1]. A median or the share of the poorest fifth would show this better [1] [4] Examiner insight: Simple subtraction (5 − 3 = 2%) is close but not exact; the ratio method is safer when a decimal place is asked for.

4. (a) 450 ÷ 90 = 5 j-units per k-unit [1] (b) Market rate: 60,000 ÷ 8 = 7,500 k-units [1]. PPP: 60,000 ÷ 5 = 12,000 k-units [1] (c) Country J (12,000 against 11,000) [1] [4] Examiner insight: The ranking reverses between the two conversions, so state both comparisons rather than only the final one.

5. (a) (0.48 × 0.72 × 0.90)^(1/3) [1] = 0.31104^(1/3) = 0.678 [1] (b) A geometric mean penalises an unbalanced result [1], so a high income index cannot fully offset a low health or education index (the arithmetic mean here is 0.700, higher than 0.678) [1] [4] Examiner insight: Explain the effect on the result; saying only that it is “more accurate” gives the marker nothing to credit.

6. (a) Country P: 0.24 × 0.50 = 0.12 [1]. Country Q: 0.40 × 0.35 = 0.14 [1] (b) The headcount counts only how many are poor [1]. MPI also reflects the intensity of overlapping deprivations, so it shows how badly the poor are deprived [1] [4] Examiner insight: Linking each part of H × A to its meaning, extent and depth, is more convincing than repeating the formula.

7. (a) Cumulative shares: 5, 14, 28, 51, 100 [1] (b) Pair each cumulative share with the one before it and sum: 5 + 19 + 42 + 79 + 151 = 296 [1]. Gini = 1 − (0.2 × 296 ÷ 100) = 1 − 0.592 = 0.408 [1] (c) 49 ÷ 5 = 9.8 [1] (d) It ignores inequality inside each quintile, so it understates the true Gini [1] [5] Examiner insight: Show the cumulative shares first; a diagram or table of strips makes the method visible if one number is wrong.

8. (a) (52 − 47) ÷ 52 × 100 = 9.6% [1] (b) Growth: real GDP per head rose 48% [1]. Some development: infant deaths fell [1]. But progress was small: the fall was under 10% and literacy rose by only one percentage point [1]. The Gini rose from 0.41 to 0.52, so the gains were unevenly shared and the poor probably gained less than the average [1]. Judgement: this looks like growth with limited development, because the rise in output was not matched by health, education or fairness [1] [6] Examiner insight: Quote figures from the table in each point; a judgement that cites at least two indicators is better supported than one resting on GDP alone.

9. Any three, each framed as a contrast with an LEDC: industrial output and manufactured exports growing faster [1]; incomes per head rising quickly [1]; urbanisation and a growing middle class, or larger FDI inflows, or a more diversified economy less reliant on primary products [1] [3] Examiner insight: A bare list of features earns less than features framed as differences from an LEDC.

10. Sustainable development improves well-being of current and future generations [1] and does not borrow from future living standards by running down natural resources [1]. For example, fast growth based on burning more fossil fuel [1] increases pollution and climate damage that future generations inherit [1] [4] Examiner insight: Say how the growth causes the harm; naming “pollution” alone does not explain the threat.

11. Strengths: it measures average output per person, widely available for comparison across countries and years [1]; usually correlates with life expectancy and education, as higher output funds health and schools [1]. Weaknesses: it is an average, so unequal income distribution can leave most people below the figure [2]. Informal and unpaid work is missed, understating poorer countries [1]. Pollution and resource depletion are not subtracted, so growth that harms future living standards still raises GDP [2]. Comparisons across countries depend on exchange rates, so PPP is needed [1]. Judgement: it is a useful starting indicator, but reliability depends on inequality, the share of informal activity and whether growth is sustainable, so it should be used with HDI, IHDI and distribution measures [1] [9] Examiner insight: Each weakness should end with a consequence; a judgement that names the conditions it depends on is stronger than “it depends”.

12. (a) Country D: (0.81 − 0.64) ÷ 0.81 = 21.0% [1]. Country E: (0.74 − 0.69) ÷ 0.74 = 6.8% [1] (b) Country D has the higher average achievement [1] but loses much more to inequality, so its typical person is closer to Country E’s position (IHDI 0.64 against 0.69) [2]. Country E has the higher IHDI, so its gains are shared more evenly [1]. Limits: IHDI still omits environment and freedom, and survey data may be weak [1]. Judgement: Country E likely offers the better living standard to a typical person, though the gap is small and depends on the weight put on inequality [1] [8] Examiner insight: The two sets of figures point in opposite directions, so state which one you rely on and why.

Where marks are usually lost

• Reporting nominal rather than real growth.
• Dropping units, such as “per 1,000 live births”.
• Describing indicators without saying what the number means for living standards.
• Treating a high average as proof that most people are better off.
• Using growth in total GDP when per head or distribution is asked.
• Listing limitations with no consequence or no judgement at the end.
• Confusing PPP with the market exchange rate.
• Mixing up IHDI (adjusted average) and MPI (counted deprivation).

Next steps

• Review the revision notes and study guide.
• Use the OxfordAQA Economics hub and checklist.
• Take the free 10-minute diagnostics.
• Book a free trial class.

Official syllabus

OxfordAQA International AS and A-level Economics (9640) specification, version 1.2, section 3.4.3.1, published by OxfordAQA (first teaching September 2020, first A-level exams May/June 2022).