IGCSE Development Studies: Specimen Questions with Answers 3 - 4 of 98

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Indicators Poverty in a Country

Question 3 (3 of 7 Based on Passage)

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Explain what do you mean by GDP?

Explanation

GDP is the worth of net produce in a country in a given financial year. For example- If it is said that a countries GDP fell by 2 % it means that the country՚s produce in the last year has fallen by 2 % . The reasons for fall in GDP can be –

  • Fall in the demand by the consumers.
  • Adverse impact on manufacturing and service sector affected due to natural causes like, monsoon.

GDP is the report prepared at the end of the financial year. Effect of decline in GDP on an economy is as follows:

  • Unemployment: A reduction in production means that less people are employed which leads to less amount of money with the people to make purchases.
  • Market situation won՚t be a good one
  • A fall in GDP will result in reduction in the size of the economy.
  • A decrease in the GDP will cause a fall in the average rate of interest in an economy.

Question 4 (4 of 7 Based on Passage)

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Name any two countries with highest level of poverty and state the reason for poverty prevailing in those countries.

Explanation

“Poverty is defined as not having enough material possession or income to cover a person՚s basic personal needs, sometimes so extreme where a person lacks food, clothing, and shelter.” It is the ratio of the total number of people in each age group whose income is below the poverty line. Poverty is a cyclical trap i.e.. for people to rise above the poverty level they need to get education, proper health care facilities, and access to clean drinking water, and job opportunities to improve their financial condition.

Two countries with highest level of poverty are:

  • South Africa (26.6 %)
  • Costa Rica (20.9 %)

Reason for highest level of poverty in the world is that they have the highest inequality gap in the world where the top one percent income earners take away the 20 % of all the income. Poverty is also marked by the existence of high level of unemployment and lack of high paying jobs.

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