IGCSE Development Studies: Specimen Questions with Answers 5 - 6 of 98

Passage

Indicators Poverty in a Country

Question 5 (5 of 7 Based on Passage)

Edit

Write in Short

Short Answer▾

Give three disadvantages of GDP as poverty indicator.

Explanation

Disadvantages of Using GDP as an Indicator of Economic Development Are

  • GDP can hide inequalities as it does not show the distribution of wealth
  • GDP can be manipulated by the governments of the country who show themselves as poor to collect more aid for various projects.
  • GDP does not include informal economies or subsistence level which is not an important factor in less developed countries.
  • GDP fails to indicate whether a country՚s progress is sustainable or not.
  • It does not consider environment quality, health and education levels of a country, advancement of technology, activities that are not conducted in the market, increase in the inequality gap etc.

Question 6 (6 of 7 Based on Passage)

Edit

Write in Short

Short Answer▾

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.

Developed by: