Economics paper 2 Essay plans
1. 2017
Extract B (lines 17-19) states 'India still protects its economy with anti-dumping measures
and export subsidies that are designed to promote economic growth.'
With the help of a diagram, explain how export subsidies may help promote
economic growth in India. [9 marks]: Export subsidies are a way in which the government
can support the economy by providing financial support.
Economic growth is where output in the economy is increasing, causing lower rates of
unemployment and higher standards of living. this can be measured using the CPI and GDP.
Export subsidies can help boost the Indian economy by promoting more exports to other
countries. The government are able to reduce prices of goods and services in an economy
by providing payment to producers. Therefore their production costs have decreased as
demonstated in diagram
Outward shift in AS. Producers should decide to reduce costs for consumers due to the
decreased production costs, demonstated by fall in Price Level. Output should rise due to
more foreign purchases due to lower prices. Consumer surplus has increased, and this is
shown by expansion along demand curve. An example of this would be the government
subsidies toward the rice exporters.
With larger amounts of trade occuring, The output has increased. therefore demand for
labour will increase within the economy, causing a reduction in umenployment. The GDP
per capita should increase due to a larger labour force and therefore standards of living
should increase due to a larger amound of disposable income. A larger percentage of the
population are able to afford essentials and therefore absolute poverty decreases.
Export subsidies also increase FDI due to a higher ROI within the country. More businesses
will set up in India and this should reduce unemployment and increase exports even futher,
improving the trade balance.
2. 2017
Extract C (lines 2-3) states 'More recently, India has begun to use more market-based
strategies to help its development, including liberalising trade and privatisation.'
, Economics paper 2 Essay plans
Using the data in the extracts and your knowledge of economics, evaluate the view that
greater use of market-based strategies is the best way to improve the economic
development of India. [25 marks]: Market based strategies - promoting the use of market
firces and easing the use of government regulation. Opening up economies to compete
globally
Economic development - Occours when India produces more goods and services within its
economy. Can be measure by GDP and CPI. Economic growth tends to decrease
unemployment rates, reduce poverty and boost standards of living, therefore bettering the
HDI.
P1
Some may argue that market based stratergies are the most effective way to improve
economic developemnt within india. An example would be through privatisation of state
owned companies. State owned companies dont tend to be run efficiently due to a lack of
profit incentive. Therefore they dont tend to be x efficient where costs are at the lowest
point on the average cost curve. Therefore, privatisation of firms will cause firms to operate
more efficiently, reducing costs and becoming more productive. Shareholders will receive
rewards when the business performs well and therefore may decide to raise wages of
workers. This wage increase in workers tends to lead to higher levels of productivity and
moral as demonstrated in the diagram below.
An increases in wages within India will also lead to a reduction in unemployment due to an
increased incentive to work. Wages are increased and therefore rewards for your labour is
higher. This may lead to a multiplier effect within the economy where Unemployment rates
have fallen, causing an increase in disposable income. if MPC is high within india then AD
shifts outward. This may cause another wage increase of privatised firms and therefore
possible boosing AD multiple times.
However, Indias labour force is 90 percent informal, meaning they dont claim tax or get
monitored. This can lead to exploitation of labour whereby they are underpaid to a point
where they are unable to affort essential goods. Therefore AD will not shift outward
because wage rises may not occour. Instead, income inequality increases because wealthy
, Economics paper 2 Essay plans
shareholders recieve more profits but the working class dont recieve pay rises. The pay gap
increases, worsening poverty.
P2
Some economists may argue that using market based strategies is not the best solution
because the economy is not yet ready to face global competion. Currently, the economy
may not have experienced adiquate economys of scale, therefore causing the price of
goods and services to be greater than competitiors. If the markets are opened up globally,
domestic demand for goods and services may fall due to cheaper substitutes abroad,
therefore reducing profits for Indian companies. This decreased demand for domestic
goods and services may then lead to reduced employment as the QD has fallen below QS.
Poverty rates increase due to number of those unemployed and this worsens the standards
of living. Also, the trade balace will become negative due to the number of increased
imports compared to exports. In reality, this may not occour because costs of production
should decrease due to more competitive prices on raw materials. Therefore AS will shift
outward due to a reduction in production costs. This leads to an increase in QD and
therefore output should increase. In order to output at higher levels, the firms will need to
hire more employees and therefore unemployment rates decrease. The HDI should have
improved due to a reduction in absolute poverty.
P3
Some economists may argue that instead of market based strategies, the best way to boost
economic development is through expansionary fiscal policy, where taxation is reduced and
government spending is increased.
Gove spending is a component of AD, therefore if government spend on re educating
those in relative and absolute poverty, then in the long run these people should earn
higher wages at higher skill levels. This causes them to have a significantly higher income
and therefore their disposable income increases. If consumers are rational, then they will
consume more goods and services, therefore boosing AD. This will lead to multiplier
effect.
1. 2017
Extract B (lines 17-19) states 'India still protects its economy with anti-dumping measures
and export subsidies that are designed to promote economic growth.'
With the help of a diagram, explain how export subsidies may help promote
economic growth in India. [9 marks]: Export subsidies are a way in which the government
can support the economy by providing financial support.
Economic growth is where output in the economy is increasing, causing lower rates of
unemployment and higher standards of living. this can be measured using the CPI and GDP.
Export subsidies can help boost the Indian economy by promoting more exports to other
countries. The government are able to reduce prices of goods and services in an economy
by providing payment to producers. Therefore their production costs have decreased as
demonstated in diagram
Outward shift in AS. Producers should decide to reduce costs for consumers due to the
decreased production costs, demonstated by fall in Price Level. Output should rise due to
more foreign purchases due to lower prices. Consumer surplus has increased, and this is
shown by expansion along demand curve. An example of this would be the government
subsidies toward the rice exporters.
With larger amounts of trade occuring, The output has increased. therefore demand for
labour will increase within the economy, causing a reduction in umenployment. The GDP
per capita should increase due to a larger labour force and therefore standards of living
should increase due to a larger amound of disposable income. A larger percentage of the
population are able to afford essentials and therefore absolute poverty decreases.
Export subsidies also increase FDI due to a higher ROI within the country. More businesses
will set up in India and this should reduce unemployment and increase exports even futher,
improving the trade balance.
2. 2017
Extract C (lines 2-3) states 'More recently, India has begun to use more market-based
strategies to help its development, including liberalising trade and privatisation.'
, Economics paper 2 Essay plans
Using the data in the extracts and your knowledge of economics, evaluate the view that
greater use of market-based strategies is the best way to improve the economic
development of India. [25 marks]: Market based strategies - promoting the use of market
firces and easing the use of government regulation. Opening up economies to compete
globally
Economic development - Occours when India produces more goods and services within its
economy. Can be measure by GDP and CPI. Economic growth tends to decrease
unemployment rates, reduce poverty and boost standards of living, therefore bettering the
HDI.
P1
Some may argue that market based stratergies are the most effective way to improve
economic developemnt within india. An example would be through privatisation of state
owned companies. State owned companies dont tend to be run efficiently due to a lack of
profit incentive. Therefore they dont tend to be x efficient where costs are at the lowest
point on the average cost curve. Therefore, privatisation of firms will cause firms to operate
more efficiently, reducing costs and becoming more productive. Shareholders will receive
rewards when the business performs well and therefore may decide to raise wages of
workers. This wage increase in workers tends to lead to higher levels of productivity and
moral as demonstrated in the diagram below.
An increases in wages within India will also lead to a reduction in unemployment due to an
increased incentive to work. Wages are increased and therefore rewards for your labour is
higher. This may lead to a multiplier effect within the economy where Unemployment rates
have fallen, causing an increase in disposable income. if MPC is high within india then AD
shifts outward. This may cause another wage increase of privatised firms and therefore
possible boosing AD multiple times.
However, Indias labour force is 90 percent informal, meaning they dont claim tax or get
monitored. This can lead to exploitation of labour whereby they are underpaid to a point
where they are unable to affort essential goods. Therefore AD will not shift outward
because wage rises may not occour. Instead, income inequality increases because wealthy
, Economics paper 2 Essay plans
shareholders recieve more profits but the working class dont recieve pay rises. The pay gap
increases, worsening poverty.
P2
Some economists may argue that using market based strategies is not the best solution
because the economy is not yet ready to face global competion. Currently, the economy
may not have experienced adiquate economys of scale, therefore causing the price of
goods and services to be greater than competitiors. If the markets are opened up globally,
domestic demand for goods and services may fall due to cheaper substitutes abroad,
therefore reducing profits for Indian companies. This decreased demand for domestic
goods and services may then lead to reduced employment as the QD has fallen below QS.
Poverty rates increase due to number of those unemployed and this worsens the standards
of living. Also, the trade balace will become negative due to the number of increased
imports compared to exports. In reality, this may not occour because costs of production
should decrease due to more competitive prices on raw materials. Therefore AS will shift
outward due to a reduction in production costs. This leads to an increase in QD and
therefore output should increase. In order to output at higher levels, the firms will need to
hire more employees and therefore unemployment rates decrease. The HDI should have
improved due to a reduction in absolute poverty.
P3
Some economists may argue that instead of market based strategies, the best way to boost
economic development is through expansionary fiscal policy, where taxation is reduced and
government spending is increased.
Gove spending is a component of AD, therefore if government spend on re educating
those in relative and absolute poverty, then in the long run these people should earn
higher wages at higher skill levels. This causes them to have a significantly higher income
and therefore their disposable income increases. If consumers are rational, then they will
consume more goods and services, therefore boosing AD. This will lead to multiplier
effect.
