Factors of Production (Cambridge (CIE) IGCSE Economics): Exam Questions

In March 2017, Peru was hit by floods and the strongest winds in decades. Roads, bridges, houses and capital goods were destroyed. It is expected that the damage caused will affect Peru’s Human Development Index (HDI) and economic growth rate. In 2016, Peru experienced a 4% economic growth rate which was higher than the growth rate of the USA

It has recently been revealed that a king works as a part-time pilot for a multinational airline. Some pilots and police officers have left their jobs to become teachers and others have left to become sole traders. The wages teachers earn vary according to their age.

Some economists have claimed that the 21st century will be the ‘African century’ because of the growth in their working-age population. Forecasts show that by 2030, Africa’s contribution to the increase in the global labour force will exceed that from the rest of the world. This will affect incomes, saving, and economic policies in African countries.

The price of gold rose in 2016. This encouraged owners of gold mines to employ more resources to increase the supply of gold. The level of competition in gold production varies in the different gold producing countries. A number of countries, including India, impose a tariff on imported gold.

High technology (hi-tech) firms use a range of resources including labour and land. One US hi-tech firm has produced a new price index which it claims is more accurate than the Consumer Prices Index (CPI). Central banks try to achieve the most accurate measure of inflation because inflation has effects on a range of people, including savers and borrowers, and on the level of investment in a country.

Farms in the USA are getting larger. One dairy farm in the state of Indiana has over 38 000 cows. Farms in the USA compete with farms in both developed and developing countries. The value of the farms’ exports of milk appears in the trade in goods section of the current account of the USA’s balance of payments.

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Changes in the Ghanaian economy

Table 1.1 Ghana fact file 2024

Ghana, a lower-middle-income country in West Africa, has experienced steady economic growth over the past two decades. The structure of its economy has changed significantly. While the country continues to rely on exports of cocoa beans and gold, the tertiary sector – particularly banking, tourism, and telecommunications – now contributes more than half of GDP. Investment in mobile technology and digital services has allowed Ghana to expand financial inclusion, bringing more people into the formal banking system. Tourism has also grown as visitors are attracted to Ghana’s natural reserves and cultural heritage.

Despite this progress, Ghana faces serious macroeconomic challenges. The inflation rate rose to 11% in 2024, mainly because of rising food and fuel prices. Higher costs of living have forced many households to reduce saving and borrow more from banks. Lenders have expanded credit to consumers and firms, but some economists worry that this may increase financial risks if interest rates rise further. At the same time, the government faces high levels of public debt, and a large proportion of tax revenue is used to pay interest on loans.

The government has tried to address health concerns by introducing an indirect tax on sugary drinks. Supporters of this policy argue that it will reduce sugar consumption, improve public health, and lower long-term healthcare costs. However, producers warn that the tax will raise production costs, reduce output, and harm employment in the soft drinks industry.

Living standards in Ghana have improved: life expectancy has risen and poverty rates have fallen. Yet the Human Development Index (HDI) remains lower than in some other middle-income countries. Critics argue that while GDP per head is increasing, improvements in education and healthcare are not keeping pace.

Table 1.2 GDP per head and HDI in selected countries, 2024