Assess the view that to improve the living standards of their citizens, governments across the
world should prioritise achieving economic growth (use Extract B)
GDP is the total value is the total value of output produced in a given time period
Economic growth is the growth of output in an economy over a period of time
To improve the living standards of the citizens, governments across the world should prioritise achieving economic growth. If
governments increase their expenditure and run on a budget deficit, this will improve living standards by achieving economic
growth.
Increase on government spending means firms have greater investment and better infrastructure to work with thus reducing
inefficiencies and allowing allocative efficiency to occur. This will mean firms will see a reduction in their cost of production
leading to them having more capital to spend. As a result, they will seek to produce more to maximise profits and will
employ more labour due to costs
Higher employment will lead to an increase in disposable incomes, leading to an increase in aggregate demand. Therefore,
this will improve living standards as people can purchase more of their needs and wants
The increase in consumer expenditure will lead to firms making greater profit in which they will employ more labour to
increase their productivity, leading to economic growth and further employment
As a result, GDP goes up as well as incomes, allowing thr government to receive more tax revenue, leading to governments
being able to run a larger budget deficit
However, this may lead to inflation as the more people employed, the greater disposable income. As a result, AD increases
thus a rightward shift occurs. This leads to demand-pull inflation as seen with an increase in AD
to AD1 has led to the price level increase from P1 to P2
An increase in the rate of inflation will undo the effects of economic growth as a result economic
may increase real GDP and create jobs and increase incomes and leading to greater spending but
achieving these through a budget deficit is unsustainable in the long run loading to inflation
leading to unemployment and a decreasing rate of economic growth
The standards of living should be improved through supply-side policies which are sustainable. As extract C states the
global economy is unstable, inequalities are rising and the challenges of climate change. As a result, governments across the
globe should prioritise achieving economic growth through supply side policies. Governments should be investing in research
and development of goods and services that are environment friendly
CO2 emissions lead to lead to deaths and diseases hurting economies as the labour workforce is not healthy and thus
becoming inefficient and leading to employment and leading to misallocation of resources. Through research and
development new goods and services can be provided thus creating new jobs leading to employment and increasing
economic growth. The increase in disposable income through employment will lead to greater AD and greater AS
Moreover, it will lead to greater tax revenue which can further be invested in research and development or government can
subsidise goods and services which improve living standards
However, this in the short run will lead to structural unemployment as people will need to be trained, however, this can be
shortened by the government providing education and training for those who are structurally unemployed
world should prioritise achieving economic growth (use Extract B)
GDP is the total value is the total value of output produced in a given time period
Economic growth is the growth of output in an economy over a period of time
To improve the living standards of the citizens, governments across the world should prioritise achieving economic growth. If
governments increase their expenditure and run on a budget deficit, this will improve living standards by achieving economic
growth.
Increase on government spending means firms have greater investment and better infrastructure to work with thus reducing
inefficiencies and allowing allocative efficiency to occur. This will mean firms will see a reduction in their cost of production
leading to them having more capital to spend. As a result, they will seek to produce more to maximise profits and will
employ more labour due to costs
Higher employment will lead to an increase in disposable incomes, leading to an increase in aggregate demand. Therefore,
this will improve living standards as people can purchase more of their needs and wants
The increase in consumer expenditure will lead to firms making greater profit in which they will employ more labour to
increase their productivity, leading to economic growth and further employment
As a result, GDP goes up as well as incomes, allowing thr government to receive more tax revenue, leading to governments
being able to run a larger budget deficit
However, this may lead to inflation as the more people employed, the greater disposable income. As a result, AD increases
thus a rightward shift occurs. This leads to demand-pull inflation as seen with an increase in AD
to AD1 has led to the price level increase from P1 to P2
An increase in the rate of inflation will undo the effects of economic growth as a result economic
may increase real GDP and create jobs and increase incomes and leading to greater spending but
achieving these through a budget deficit is unsustainable in the long run loading to inflation
leading to unemployment and a decreasing rate of economic growth
The standards of living should be improved through supply-side policies which are sustainable. As extract C states the
global economy is unstable, inequalities are rising and the challenges of climate change. As a result, governments across the
globe should prioritise achieving economic growth through supply side policies. Governments should be investing in research
and development of goods and services that are environment friendly
CO2 emissions lead to lead to deaths and diseases hurting economies as the labour workforce is not healthy and thus
becoming inefficient and leading to employment and leading to misallocation of resources. Through research and
development new goods and services can be provided thus creating new jobs leading to employment and increasing
economic growth. The increase in disposable income through employment will lead to greater AD and greater AS
Moreover, it will lead to greater tax revenue which can further be invested in research and development or government can
subsidise goods and services which improve living standards
However, this in the short run will lead to structural unemployment as people will need to be trained, however, this can be
shortened by the government providing education and training for those who are structurally unemployed
