Real-world examples

Question 1

Healthcare funding issues in Africa

Answer 1

WHO has warned that a lack of funding is hindering the fight to improve healthcare in Africa
Governments spend 1% of the world’s financial resources on healthcare but bear 24% of the global diseases
Spending by individual governments varies greatly (highest in Namibia and South Africa which is 10x more than in Kenya and Tanzania and 20x more than in Ethiopia and the DRC)
Total funding is not the only challenge since not all wants can be satisfied and has to be directed at those areas of healthcare where there is the most need

Question 2

How has the financial crisis affected Japan and the UK’s interest rates?

Answer 2

Since the financial crisis of 2008, interest rates have been drastically cut to record low levels such as the UK’s 0.25% from 2016 to 2018. Japan has had an interest rate of -0.1% since 2016

Question 3

James Dyson

Answer 3

His range of products are used around to world
He is best known for vacuum cleaners
By the early 1980’s he had a working prototype of his vacuum cleaner but it took another 10 years for it to go on sale as a commercial product
They launched in 1993 and became a best seller
Production was moved from the UK to Malaysia in 2002
Resulted in job losses in the UK
In 2019, it was estimated that his net worth was $5 billion

Question 4

India’s rich people

Answer 4

India has many rich people but many still live in extreme poverty where they live on less than $1.90 per day

Question 5

Vietnam is Asia’s rising star

Answer 5

Over the last 30 years, it has changed from one of the world’s poorest economies to a MIC
Since 1986, Vietnam has changed from a centrally planned economy to an economy that has characteristics of a planned and market economy
In 2019, growth was expected to reach 6.6%, below the 7.1% achieved in 2018
Largely attributed to the manufacturing of electronic goods, industrial parts and footwear for export
It has benefitted from the ongoing trade dispute between China and the USA
Businesses remain state owned
Private ownership and investment are not allowed

Question 6

New Zealand’s near market economy

Answer 6

One of the top-ranked market economies in the world
In 2019 it placed 3rd in the Heritages Foundations Index of Economic Freedom. Only Hong Kong and Singapore have a higher score
Has followed a market-orientated economy for many years
Since 1980’s the government have perused policies of deregulation and privatisation to liberalise the economy
Has free trade agreements especially with Australia and other Southeast Asian countries
It is a member of the Comprehensive and Progressive Agreement for a Trans-Pacific Partnership
6th richest country and experienced economic growth since 2000 except for 2010-2012

Question 7

Restructuring the Nigerian economy

Answer 7

Nigeria is the largest country in Africa with a population of 160 million in 2018
The 2012 financial crisis showed how vulnerable Nigeria’s oil industry was to external shocks in the global economy
The government policy has since been to restructure the economy to reduce its dependence on oil
Service industries have grown
Oil still contributes to 2/3 of government revenue
Manufacturing continues to grow and is the largest of any in Africa
Agriculture remains an important sector but has seen decline since 2012

Question 8

Efficiency differences in the Nigerian economy

Answer 8

Agriculture contributes to 21% in 2018 and 34% of the workforce
Manufacturing contributes to 19% in 2018 and 11% of the workforce
Services contributes to 52% in 2018 and 52% of the workforce
Oil contributes to 8% in 2018 and 3% of the workforce

Question 9

Who pays for local fire and rescue?

Answer 9

Most fire services are funded from taxation and are provided free of charge in countries including Australia, India, Indonesia, Mauritius, Malaysia and New Zealand
Exceptionally in Canada and the USA charges may be made
A women in Canada received a bill for $28000

Question 10

Toll-free roads not possible in Malaysia

Answer 10

China, India, Indonesia, Pakistan and Malaysia have toll roads as well as roads funded by the government
The Malaysian government has to face major road congestion
Toll-free roads are not possible for financial reasons

Question 11

Technology improves efficiency of coffee producers

Answer 11

The global price of coffee is at its lowest level in 13 years
The fall in price is having a major impact on growers in Brazil, the world’s largest producer where growers are unable to may money
The way forward is to become more efficient
Requires and increase in productivity and a decrease in costs
Can be achieved through the use of machines
These typically cost $150000 and cut harvest costs by 40-60% since fewer workers need to be hired

Question 12

India’s Jet Airway grounded

Answer 12

In 2019, the aviation industry in Asia continued to experience growth especially in India
Competition is fierce with low fares internally to attract passengers from Indian Railways
In 2019, Jet Airways stopped flying affecting 23000 of its workers as well as those employed in providing support services

Question 13

The price elasticity of natural gas demand in China

Answer 13

Natural gas is cleaner and more environmentally acceptable in production especially in China which relies heavily on coal-fired power stations
Their economic growth has been fuelled by coal and oil
Short and long run PED estimates are -1.52 and 0.41
XED of demand for coal with respect to natural gas price is -0.76 in the short run and 0.01 in the long run

Question 14

Supply of cashew nuts from Tanzania

Answer 14

World’s largest producer of cashew nuts
Revenue is a valuable source of export revenue
Income of farmers is dependent on getting a good price
Demand is high especially in Asian countries
Supply is unpredictable (weather)
Private buyers can bid for the harvest
Government had to buy unsold stock in 2018
Sold this to Vietnam which has a processing industry

Question 15

The price of onions

Answer 15

Essential ingredient in Asian cooking
Most producers are small farmers who have no control over supply and whose only income is the onions
Biggest trading centre is in India
Harvest spread over 3 seasons, supply is variable
In 2017 supply was up 11% but wholesale prices were down 30-40%
In November 2017, supply dropped and prices soared over 170% in a few weeks

Question 16

Kenyan farmers are passionate about passion fruit

Answer 16

In 2018, horticulture generated 2% of GDP
Most are exported to the EU and UK
Kenyan farmers are finding it hard to meed increased demand
In 2017, flower exports to the UK grew 2% and traded price grew by 10%
Supplying flowers which are flown is risky
Demand for passion fruit outstrips supply
Future supply depends on how fast farmers can switch from current growth to passion fruit trees
Little capital needed to buy trees

Question 17

Cocoa market in Cote d’Ivoire and Ghana

Answer 17

Global market for cocoa is expected to grow 4% in the next few years. Increasing demand for cocoa for pharmaceuticals and cosmetics. World price has been falling due to oversupply. In 2018, the government agreed to introduce measures to reduce the risk of oversupply especially crop diversification

Question 18

Market for biscuits in India

Answer 18

Parle Products is the largest biscuit producer in India. It manufactures products sold especially in rural areas. Tax is now 18% on its products which used to be 12% on premium biscuits and 5% on all others. Factories have been reduced and there are concerns about job losses

Question 19

Increasing demand for avocados

Answer 19

Increase in demand due to growing global awareness of the health benefits. Has resulted in rising prices. Increased demand has come from the USA, China and Europe where demand nearly doubled between 2018 and 2020. More countries are producing them for the export market

Question 20

Car market in Pakistan

Answer 20

Overall trend has been upwards but the government placed a ban on the purchase of new cars by anyone who had not submitted and income tax return. The interest rate grew to 4.25% making loans expensive. Growth in demand for cars is expected to fall

Question 21

Winners and losers in the global coffee market

Answer 21

China is the latest market to see a sharp increase in the number of retail coffee outlets. The coffee shop market is dominated by Starbucks which has about 3600 outlets in 150 cities in China.
In 2018, Coca Cola bought Costa from its UK owners and now has over 500 stores and plans for expansion.
Both face competition from Chinese owned Luckin Coffee which set up 1800 new outlets in 2018 giving it a total of 2400

Question 22

Chinese shoppers go wild on single’s day

Answer 22

11th of November. Is a 24-hour shopping spree started in 2009 by the CEO of Alibaba, Daniel Zhang. It is bigger in terms of sales than Black Friday and Cyber Monday put together. In 2018, sales were of $30.0bn from over 1bn orders. This was a 27% increase on 2017. Attracted buyers from Japan, Korea, Australia, the UK and the USA

Question 23

Education in sub-saharan Africa

Answer 23

According to UNESCO, Sub-Saharan Africa has the highest rates of children not in education. 1/5 of children between 6 and 11 are not in school, 1/3 between 12 and 14 and 60% between 15 and 17. Fewer girls attend than boys. May be due to corruption, conflict and poverty.

Question 24

Vegetable oil imports subject to new tax

Answer 24

The government of India plans to impose an extra 5% tax on vegetable oil imports and to use the revenue to boost oilseed production. India buys palm oil from Indonesia and Malaysia, soy oil from Latin America and sunflower from Black Sea suppliers. Demand for vegetable oils has trebles over the last 20 years from population growth. The cost of imported vegetable oils is nearly $10bn a year.

Question 25

The richest and poorest in Asia

Answer 25

1% if India’s richest population own 73% of the total wealth. The poorest 50% own just 1% of the wealth.
The 3 richest people in Asia are from China but their wealth is small compared to that of Jeff Bezos, the richest man in 2019
Millions of people in Asia and Africa are living below the international poverty line of $1.90 and have no regular water supply

Question 26

Inequality in Malaysia

Answer 26

Reducing income inequality has been a key policy for at least 50 years. The Gni coefficient in 2018 was 0.4 compared to well over 0.5 in 2019
The earnings gap between Malaysia’s top 20% and the rest of the population has nearly doubled since 2000 putting more people into relative poverty (less than 1% are in absolute poverty)

Question 27

Nigerias output grew 90% overnight

Answer 27

On April 5th 2013, Nigerias output increased significantly. This was because the Nigerian government statisticians has made changes in the way they measured the country’s output causing the government to announce a significantly higher figure. They included figures on industries that has not been included before or had been underestimated. The new figure showed that the average annual income in the country has increased from $1500 to $2688. It has also overtaken South Africa as Africa’s largest economy. These 2 produce over 1.2 of Africa’s output
In 2018, Nigerias output was valued at $368bn. Nigerias population is higher than South Africas’s. In 2018 Nigeria has a population of 96m while South Africa has a population of 58m. Average income was 3x as high in South Africa

Question 28

National income in Laos and Vietnam

Answer 28

National income data indicated that economic activity was greater in Vietnam than in Loas in 2019. It suggested that more was produced in Vietnam than Laos and that people in Vietnam had on average a higher income allowing them to buy more goods and services

Question 29

India’s growth in output

Answer 29

In 1990 India’s output was only a quarter of the Uk’s output. By 2019, India’s GDP was almost the same as the UK’s. India’s output has increased by 7% a year on average since 2000. The output of the UK grew by an average of 1.8% a year over this period
One reason for the rapid growth of the Indian economy has been the decision by firms in the country to spend more on capital goods including electrical equipment and textile machinery. The rise in investment has created more jobs. The higher employment has les to more spending by Indian households on consumer goods and more tax revenue for the government. With more revenue the government can spend more on education and healthcare.

Question 30

Venezuela’s circular flow of income

Answer 30

In 2018, Venezuela’s output fell. The value of the country’s exports, consisting mainly of oil decline. At the time time the resident increasing spending on imports. Government spending increased and reached a level over twice that of the ax revenue raised

Question 31

The rising of Southeast Asia

Answer 31

Since the mid 1980’s, Vietnam has increase output at a steady rate. It have produced over 6% more than the previous year. The higher output led to higher incomes. This has caused the country to go from one of the poorest in the world to a middle income country. The income per head was $320 in 1985 and was $2343 in 2019. This has increased spending in the economy both on consumer and capital goods. The rise in investment by domestic and foreign firms including Samsung which have set up production in the country is one of the causes of the increased output. Other causes include an improvement in education and infrastructure and a move to a market economy. Is now a major exporter of high tech and clothing products. With a growing population more skilled workers and its development of new industries including AI means it has the potential to grow more. Total supply is likely to move in line with its total demand keeping prices stable

Question 32

Differences in investment in Myanmar and Mauritius

Answer 32

Investment forms a similar % of GDP. Consumer expenditure is nearly 80% of GDP in Mauritius and 60% in Myanmar. Exports are 28% of GDP in Myanmar and 55% in Mauritius. It was predicted that investment would increase in both in 2019

Question 33

Chinas economy rivals the USA

Answer 33

On nominal GDP, China has the second highest output in the world in 2018 with the USA having the highest output. On another measure, China was on top
China’s output has increased significantly for the last 40 years. It has grown at an average annual rate of 8%. In 1978 the output was $150 billion but by 2018 it was $13.4 trillion. This is due to a number of changes including significant increases in investment
Over 700 million have been lifted out of poverty. Average income per head has increased from $155 in 1978 to $9627 in 2018. Life expectancy has risen from 65.9 to 76.4 years. Over 1/2 billion people have moved form rural to urban areas

Question 34

High rates of economic growth in Cote D’Ivoire

Answer 34

The Ivory Coast is a West African country which enjoyed some of the highest rates of economic growth in the world between 2010 and 2019. The country has a population of 28 million and a labour force of 9 million. It has a large agricultural sector and is the world’s largest producers and exporter of cocoa beans

Question 35

Unemployment in South Africa

Answer 35

In 2019, over 1 in 4 people in the country who wanted and were able to work did not have a job. This compared with a global average of only 1 in 20 being without a job. Youth unemployment was especially serious in South Africa. More than 1/2 of those between 15 and 24 who wanted to work were unemployed.
Reasons included a lack of skill and qualifications to d the jobs on offer, living too far from where jobs were and that there were not enough job vacancies
The unemployed did not contribute to output and may have experienced poverty. Children were likely to have more than an average chance of experiencing unemployment when they grew up

Question 36

Unemployment in Greece

Answer 36

Has been high in recent years. In 2012 the rate was 21% which rose to 28% (record high for the country) in 2013. The increase was largely due to cuts in government spending and increases in tax rates. These government policy tools were designed to reduce the gap between government spending and tax revenue. In the short run, they also reduced AD. By 2016 the unemployment rate had fallen to 24% and by 2019 it had declined further to 16%

Question 37

Food queues lengthen in Venezuela

Answer 37

At the end of 2018 many price were doubling every 19 days. Each currency unit could buy less than a day before. In 2016 the price of a cup of coffee was 450 bolivars. By the end of 2018 it was 1 million bolivars. In many cities long queues formed at supermarkets and the supermarkets ran out of food. People were engaging in barter. Annual living conditions fund that 6/10 people said they went to bed hungry as they could not afford to buy enough food. With wages rising by a much small percentage than prices and unemployment rising, emigration from the country increased. 2.5 million people, 1/7 of the population left between 2014 and 2018