A-LevelEconomicsThe macroeconomy9708/42 · May/June 2019 · Q725 Marks
Explain what is meant by actual economic growth and potential economic growth.
- (a)Explain what is meant by actual economic growth and potential economic growth.[12]
- (b)'Health, education and savings are the most important factors in determining long-term development in developing countries.' Comment on this statement.[13]
Mark scheme
Marking points from the official mark scheme (May/June 2019). The mark or mark type is shown in brackets.
- [12] (a) A definition of actual economic growth (SR) in terms of an increase in real gross domestic product per annum. Potential economic growth (LR) as the change in economic capacity which may or may not be immediately utilised.
- Use of the production possibility frontier (PPF) to explain actual and potential economic growth. An appropriate AS & AD analysis is acceptable. Keynesian 45° diagram.
- [13] (b) Links between the 3 factors and development.
- Relevance of other factors in developing countries. For example foreign trade, trade substitution, FDI, infrastructure, technology, social and environmental elements.
- It is the interplay between the factors which leads to greater or lesser success.
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