In March 2017, Peru was hit by floods and the strongest winds in decades. Roads, bridges, houses and capital goods were destroyed. It is expected that the damage caused will affect Peru's Human Development Index (HDI) and economic growth rate. In 2016, Peru experienced a 4% economic growth rate which was higher than the growth rate of the USA.

Mark scheme

Marking points from the official mark scheme (May/June 2019). The mark or mark type is shown in brackets.

1. [2] A human-made good (1) used to produce other goods and services (1).
2. [4] an increase in GDP / GNI / income per head (1) raises the goods and services people can consume / due to e.g. higher employment (1); an increase in life expectancy (1) indicates better healthcare / due to better healthcare / more investment in healthcare (1); an increase in education / mean and expected years of schooling (1) increases job opportunities / quality of life / due to government investing more in education (1)
3. [6] Up to 4 marks for the diagram: axes correctly labelled in terms of two different products or types of products (1); initial curve or downward sloping line is drawn to the axes (1); second curve or downward sloping line is drawn to the axes (1); An indication either by labelling or an arrow that the curve has shifted inwards / left (1) Up to 2 marks for written analysis: Bad weather will reduce the quantity of resources (1). The amount that can be produced with fewer resources will fall (1).
4. [8] Up to 5 marks for why they might: They are likely to have good education (1) good healthcare (1) this will mean skills will be high (1) productivity will be high (1) there may be advances in technology (1) reducing costs of production (1) exports may increase (1). Unemployment may be low (1) with most resources being used (1). MNCs may be attracted to set up in the country (1) contributing to the country's output (1). Foreign banks may be more willing to lend to the countries' firms (1) allowing them to expand (1). High incomes are likely to mean high demand / high consumer spending (1) encouraging firms to produce more (1). Up to 5 marks for why it might not: Countries with a low GDP per head may discover raw materials (1) which may be in high world demand (1). People in poorer countries may have more drive to improve their living standards (1) they may work harder (1). Richer countries may have a lower rate of population growth or declining populations (1) this may mean their labour forces are growing more slowly (1) restricting their ability to produce more goods and services (1). Other factors may influence economic growth (1) e.g. type of government policies pursued / deficit on the current account of the balance of payments (1).