Botswana combines capital goods and labour in its diamond mining industry. From 2015 to 2019, its average economic growth rate was $3.8\%$, compared with a world average of $2.8\%$. During this period, inflation remained low and the economy shifted away from protectionism towards free international trade.
(a)[2]
Define a capital good, and give one example.
(b)[4]
Explain two reasons why a low inflation rate may increase a country’s economic growth rate.
(c)[6]
Analyse how a government could cut protectionism and shift towards free international trade.
(d)[8]
Discuss whether a country is likely to gain from diamond mining.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “A human-made good used to make other goods or services / a good used in production” …