Economic growth — practice question

Read the source material carefully before you answer Question 1. Background material: The Belarus economy Belarus, which has a mixed economy, was among the poorest countries in Europe during the 1990s. Since that time, GDP per head has risen and poverty has fallen. The country has also seen an increase in life expectancy. Table 1.1 presents life expectancy and Human Development Index (HDI) value for six chosen countries in 2019. From 2011 to 2021, the price level in Belarus rose. Higher energy prices increased firms’ production costs in both the public sector and the private sector. Over the same period, investment in Belarus increased, the size of the country’s labour force decreased, and fewer students went on to university. Belarus makes a variety of products. Milk is one agricultural product produced there. The country is the fifth largest producer of milk in the world. The Belarus government is unwilling to subsidise milk production, although it has given large loans to mechanise the dairy industry. The Belarus government wants to promote the production and purchase of electric vehicles. It intends to construct 1300 electric vehicle charging stations by 2030. Using electric vehicles can bring environmental benefits. However, some other types of transport may offer greater benefits, and some people and firms may be unwilling to change to electric vehicles. A less popular government policy introduced in 2015 was a law that fined anyone who had been unemployed for six months or more. Anyone who failed to pay the amount owed to the government for breaking the law was jailed. If suitable jobs were available, this may have lowered frictional unemployment. However, some unemployment may have been structural or cyclical. The law was abolished in 2018.