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Economics · Oct / Nov 2025 · Paper 21 · Question 2

0455

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The question as text

In the first half of 2022, Guyana’s GDP grew by 36.4%. Most of this growth was due to higher output in the primary sector. The government used some of the tax revenue generated from this growth to fund long‑run development projects such as infrastructure and education. However, in the short run, there was a rise in house prices.

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  • 2(a)[2]

    Identify two examples of primary sector industries. Two from:

    farming / agriculture
    mining
    fishing
    forestry 2 If more than two primary industries are given, consider the first three. Accept two specific examples, e.g. growing wheat, catching tuna, but not from the same industry.

  • 2(b)[4]

    Explain two causes of rising GDP. Logical explanation which might include:

    increased consumption (1)

    decrease in taxes (1)

    such as income tax / corporation tax (1)

    increased disposable income /profits (1)

    increase in investment (1)

    leading to increase in total demand (1)

    increase in government spending (1)

    e.g. spending on infrastructure (1)

    increasing total (aggregate) demand in the economy (1)

    improvements in technology (1)

    increase in productivity (1)

    increase in the quantity (1)

    and quality of factors of production (1)

    e.g. increase in size of labour force (1)

    improved labour skills (1)

    increase in productive capacity of the economy (1)

    decrease in interest rates (1)

    cost of borrowing falls (1)

    borrowing increases (1)

    decreases in exchange rate (1)

    price of exports falls / price of imports rises (1)

    increase exports / decrease imports / increase net exports (1). 4 One mark each for two causes identified and one each for two explanations. Only reward increase in total demand once.

  • 2(c)[6]

    Analyse why house prices may increase. Coherent analysis which might include the following. Increase in demand (1)

    due to lower interest rates (1)

    increasing borrowing for house purchases (1)

    higher population (1)

    higher incomes (1)

    increasing ability to purchase houses (1)

    higher confidence (1)

    increasing willingness to buy houses (1). Decrease in supply (1)

    reduction in subsidies on new house building (1)

    increased taxation on housing (1)

    government building fewer houses (1)

    stricter planning regulation (1)

    land is used for other things e.g. infrastructure (1). Increasing cost of production of new houses (1)

    cost of labour (1)

    cost of raw materials (1)

    cost of land (1)

    increased costs passed on to buyers of houses as higher prices (1). Less government intervention (1)

    removal of price controls (1). 6 MAXIMUM 4 MARKS for identification of reasons without analysis in terms of demand and / or supply.

  • 2(d)[8]

    Discuss whether or not increased government spending on education will lead to economic development. In assessing each answer, use the table opposite. Why it might:

    increase skills / qualifications / knowledge
    increase job opportunities
    encourage more investments
    increase productive capacity
    reduce consumption of demerit goods
    improved health / life expectancy
    higher HDI Level Description A reasoned discussion which accurately examines both sides of the economic argument, making use of economic information and clear and logical analysis to evaluate economic issues and situations. One side of the argument may have more depth than the other, but overall, both sides of the argument are considered and developed. There is thoughtful evaluation of economic concepts, terminology, information and/or data appropriate to the question. The discussion may also point out the possible uncertainties of alternative decisions and outcomes. 6–8 A reasoned discussion which makes use of economic information and clear analysis to evaluate economic issues and situations. The answer may lack some depth and development may be one-sided. There is relevant use of economic concepts, terminology, information and data appropriate to the question. 3–5 Guidance Why it might not:
    takes a long time to have an impact on the economy
    financial cost of government spending e.g. taxation / borrowing
    opportunity cost e.g. health spending
    reduced benefit to the economy if there is emigration of skilled workers / net migration is negative
    government might spend the money inefficiently
    education programmes may be ineffective. Level Description There is a simple attempt at using economic definitions and terminology. Some reference may be made to economic theory, with occasional understanding. 1–2 A mark of zero should be awarded for no creditable content.
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