In March 2017, Peru was struck by floods and the strongest winds in decades. Roads, bridges, houses and capital goods were ruined. It is expected that the resulting damage will affect Peru’s Human Development Index (HDI) and economic growth rate. In 2016, Peru recorded an economic growth rate of 4%, which was higher than the growth rate of the USA.
(a)[2]
Define what is meant by a capital good.
(b)[4]
Explain two reasons for an increase in a country’s HDI.
(c)[6]
Analyse, with the help of a production possibility curve (PPC) diagram, how damaging weather influences an economy.
(d)[8]
Discuss whether countries with a high Gross Domestic Product (GDP) per head will grow faster than countries with a low GDP per head.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Man-made good” …