Syllabus Edition
First teaching 2018
Last exams 2026
Exam code: 0455 & 0987
A low-income country experiences extreme poverty in its rural areas.
What is a possible cause of this?
development of better irrigation techniques
distribution of international food aid
high trade barriers imposed by high-income countries
higher prices for agricultural produce
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Developing countries are sometimes given aid by charities and foreign governments.
Which aid programme would be least likely to lead to long-term economic growth?
the building of an irrigation system
the construction of a new airport
the distribution of gifts of food
the training of technical staff
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Which change is most likely to be expected when an economy is developing?
birth rates increase rapidly
poverty rates fall
unemployment levels rise
the primary sector overtakes the secondary sector
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What describes absolute and relative poverty?
| absolute poverty | relative poverty |
A | when there are low birth rates, high death rates, and high levels of migration | when there are high birth rates, low death rates, and low levels of migration |
B | when a person does not have enough money for food, shelter, and clothes | when a person earns less than others in the same society |
C | when everyone has an income below US$1.90 a day | when half the population has an income of US$1.90 a day |
D | when necessities cannot be afforded | when luxuries cannot be afforded |
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Which of the following best describes the poverty cycle?
A short-term rise in poverty caused by natural disasters
The increase in poverty due to overpopulation
The self-reinforcing pattern where poverty is passed down through generations
A decrease in poverty during periods of economic growth.
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In countries with absolute poverty, low incomes can start a process that keeps incomes low.
What are the stages of this process?
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low consumption low prices low output low incomes
low incomes low government spending high taxation low employment low incomes
low incomes low investment high profits low dividends low incomes
low incomes low saving low investment low productivity low incomes
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The table shows the percentage share of GDP held by the richest 20% and poorest 20% of the population in each country.
Which country had the greatest extremes of income and poverty?
| country | richest 20% | poorest 20% |
A B C D | Ghana Nigeria Senegal South Africa | 41.7% 55.7% 48.2% 64.8% | 8.4% 4.4% 6.4% 2.9% |
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Which characteristic will show that a country has significant absolute poverty?
A majority of the population will have less than average income.
Basic living needs are not being met.
Most people do not have mobile phones.
There is a high number of people living in rural areas.
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What is the purpose of progressive taxation?
An incentive for higher income individuals to work more and earn more income
To generate tax revenue for the government from all income levels equally
To redistribute wealth and reduce income inequality
To encourage investment and savings among lower income individuals
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Which policy is most likely to reduce relative poverty?
make income tax rates less progressive
reduce benefit payments
reduce the minimum wage
reduce the rate of sales tax
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Economic growth , shown by an outward shift on the production possibility frontier (PPF) diagram helps to alleviate poverty.
Which factor below leads to an outward shift in the PPF?
Reduction in capital investments
Increase in trade barriers
Improving education and training
Decrease in labour force participation
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Which statement about the relationship between the national minimum wage and poverty is accurate?
Increasing the national minimum wage always leads to higher poverty rates
Decreasing the national minimum wage consistently reduces poverty rates
The impact of the national minimum wage on poverty depends on other economic factors
Poverty rates remain unaffected regardless of changes in the national minimum wage
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Promoting economic growth helps to alleviate poverty leading to a positive impact upon economic development.
What best describes economic growth and economic development?
| Economic Growth | Economic Development |
A | An increase in national output as measured by real GDP | A sustained decrease in living standards for a country, for example education levels |
B | A decrease in national output as measured by real GDP | No change in livings standards over time |
C | A rise in the value of foreign investments | Reducing the poverty cycle |
D | An increase in national output as measured by real GDP | The sustainable increase in living standards for a country, for example education levels |
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Which factor below can contribute to poverty in developing countries?
High levels of foreign direct investment
Rapid population growth
Access to advanced technology
Stable political institutions
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