Economics 2281 · O Level · Production possibility curve (PPC) diagrams
Production possibility curve (PPC) diagrams — practice question
During March 2017, Peru suffered flooding and the strongest winds seen in decades. Roads, bridges, houses and capital goods were ruined. The resulting damage is expected to reduce Peru’s Human Development Index (HDI) and economic growth rate. In 2016, Peru recorded an economic growth rate of 4%, which was above the growth rate of the USA.
(a)[2]
Define the term capital good.
(b)[4]
Explain two reasons for an increase in a country’s HDI.
(c)[6]
Analyse, using a production possibility curve (PPC) diagram, the impact of damaging weather on an economy.
(d)[8]
Discuss whether countries with a high Gross Domestic Product (GDP) per head are likely to have a faster rate of economic growth than countries with a low GDP per head.
Worked solution & mark scheme
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