Myanmar (Burma) is seeking to move from being a developing to a developed country. It has a lower savings ratio than most other Asian economies, with its people spending most of their income. The country's Government is encouraging investment from abroad to increase its economic growth. The Government is using fiscal policy in an attempt to reduce poverty, which affects a third of its population.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2015). The mark or mark type is shown in brackets.

1. [1] high GDP per head/high average income
2. [1] high living standards
3. [1] high life expectancy/low death rate
4. [1] high proportion of the labour force in the tertiary sector/low proportion in the primary sector
5. [1] low infant mortality rate
6. [1] high labour productivity
7. [1] high level of saving
8. [1] high investment
9. [1] high level of literacy
10. [1] low birth rate
11. [1] good infrastructure
12. [1] good healthcare
13. [1] low income
14. [1] low interest rate
15. [1] may be confident about the future
16. [1] may be a lack of sound financial institutions in the country
17. [1] tax rates
18. [1] high cost of living/inflation/fear of inflation/ low prices
19. [1] buying basic necessities may take up most of the income of the poor
20. [1] low interest rate would mean it is not financially rewarding to save
21. [1] if people expect higher income in the future, they may start spending more now
22. [1] a lack of sound financial institutions in the country may mean that people may not have the ability or willingness to save
23. [1] high tax rates may mean low disposable income and so people have to spend a high proportion to buy necessities/cut in tax rates may allow people to spend a higher proportion of total income
24. [1] high cost of living/inflation would mean people would have to spend more to purchase products or fear of inflation may encourage people to spend more now or low prices may encourage people to spend more
25. [1] higher investment adds to total demand
26. [1] higher demand for capital goods will encourage the capital goods industry to produce more
27. [1] higher investment can enable firms to take advantage of advanced technology
28. [1] raise productivity
29. [1] reduce costs of production
30. [1] lower costs can reduce prices
31. [1] lower prices can raise expenditure
32. [1] this will encourage firms to raise output
33. [1] higher investment in education/training
34. [1] can raise labour productivity
35. [1] increase productive capacity
36. [1] higher investment in healthcare
37. [1] can raise labour productivity
38. [1] reduce absenteeism
39. [1] higher investment on infrastructure
40. [1] can facilitate greater production by lowering costs
41. [1] higher investment can increase international competitiveness
42. [1] raising demand for domestically produced products
43. [1] higher investment will increase the amount of goods and services that can be produced
44. [1] increasing productive capacity
45. [1] increased government spending on education and healthcare
46. [1] can raise people's skills
47. [1] increase their opportunity to gain employment
48. [1] raise earning potential
49. [1] this may be financed by increased taxation
50. [1] increased government spending will add to total demand
51. [1] this will encourage firms to produce more
52. [1] increasing employment
53. [1] increased government spending on benefits
54. [1] can raise the income of some of the poor
55. [1] increase ability to buy basic necessities
56. [1] lower indirect taxes
57. [1] will provide the poor with the opportunity to buy more products
58. [1] lower direct taxes
59. [1] may increase consumer expenditure and investment
60. [1] creating job opportunities
61. [1] increase incentive to work
62. [1] government subsidies
63. [1] may lower prices faced by the poor
64. [1] increase output
65. [1] create jobs
66. [1] increased government spending and lower taxes may benefit the rich more
67. [1] this will increase relative poverty
68. [1] reduced government spending may lower demand
69. [1] reduce output
70. [1] increase unemployment
71. [1] increased taxation may lower demand
72. [1] reduce spending power of the poor
73. [1] may act as a disincentive to work
74. [1] expansionary fiscal policy can cause inflation
75. [1] this can reduce the purchasing power of the poor