Population — practice question

Study the source material thoroughly before you answer Question 1. Source material: Cyprus Cyprus fact file Life expectancy (years): 2015 - 79, 2019 - 81 GDP per head: 2015 - $23334, 2019 - $27900 Population: 2015 - 1100000, 2019 - 1200000 Birth rate (per 1000): 2015 - 11.0, 2019 - 10.2 Cyprus is a small country with a relatively high HDI ranking in 2019. It exports a mix of goods and services, such as fruit, pharmaceuticals and clothing. Cyprus buys in most of the food it eats, although it grows most of its own grapes and potatoes. In 2019, poor weather affected the world grape harvest. Global grape production dropped by 35% and this created a shortage. Around 14% of Cyprus’s labour force works in the primary sector. The average age of Cyprus’s workers is rising and more people are now continuing to work beyond retirement age. This is especially true of highly qualified workers, who are usually well-paid, healthy and employed in jobs that do not depend on physical strength. Rising life expectancy and the higher cost of paying state pensions led some economists to propose increasing the retirement age. That change would affect the government’s budget balance. In 2019, the Cypriot government recorded a budget surplus. However, Cyprus had a deficit on the current account of its balance of payments. A country’s current account balance can be affected by its inflation rate. Fig. 1.1 shows selected countries’ inflation rates (%) and current account balances (% of GDP) in 2019. Fig. 1.1 Inflation rates (%) and current account balances (% of GDP) in selected countries 2019. Inflation rate (%) and current account balance as % of GDP for: Cyprus, Iceland, Kenya, Mongolia, Nepal, Slovenia. Cyprus had a very low interest rate in 2019. It was expected that this would affect the country’s investment. Since 2015, some firms in the country have become more capital-intensive. This has influenced Cyprus’s productivity and may have affected the quality of the products made. In 2019, two future concerns for Cyprus’s economy were that some of its agricultural land may become less productive and that some of its leading entrepreneurs may leave the country.