Question 23M.1.SL.TZ2.3
| Date | May 2023 | Marks available | [Maximum mark: 25] | Reference code | 23M.1.SL.TZ2.3 |
| Level | SL | Paper | 1 | Time zone | TZ2 |
| Command term | Evaluate, Explain | Question number | 3 | Adapted from | N/A |
Explain two reasons why a high level of government indebtedness can act as a barrier to economic growth.
[10]
Refer to Paper 1 markbands for May 2022 forward, available under the "My tests" tab > supplemental materials.
Answers may include:
- Terminology: indebtedness, economic growth.
- Explanation: of any two reasons that government indebtedness could act as barrier to economic growth, such as the opportunity cost to governments of debt repayments and interest costs; the problem of a debt trap and the ability to repay debt; the need to increase taxes and reduce government spending.
- Diagram: any relevant diagram such as an AD/AS diagram to illustrate economic growth/lack of economic growth or a PPC diagram to illustrate opportunity cost.
A maximum of [6] should be awarded if only one reason is considered.
Assessment CriteriaPart (a) 10 marks
Relatively few students chose to do this question and those that did found it challenging. The main difficulty for candidates was clearly explaining what government indebtedness means and then linking this to economic growth. There were, however, some good answers to this question that explained how the interest and repayment costs to a government which has high levels of borrowing can act as a barrier to economic growth because taxes might have to increase and government expenditure decreased. The best answers illustrated this with an aggregate demand and supply diagram.
Using real-world examples, evaluate the effectiveness of foreign aid in promoting economic development.
[15]
Refer to Paper 1 markbands for May 2022 forward, available under the "My tests" tab > supplemental materials.
Answers may include:
- Terminology: foreign aid, economic development.
- Explanation: of the possible advantages of foreign aid in terms of breaking the poverty trap, bridging the foreign exchange gap, the impact of increased investment on growth, the linkages between aid, poverty reduction and economic development.
- Diagram: use of any relevant diagram such as PPC, poverty cycle, AD/AS.
- Synthesis (evaluate): in terms of the reasons why foreign aid may not be effective in promoting development, such as corruption and aid not reaching the intended beneficiaries, the encouragement of dependency, tied aid designed to further the political ends of donor countries.
- Examples: real-world examples of countries which have been recipients of aid and the effectiveness or otherwise of that aid in promoting development.
N.B. It should be noted that definitions, theory, and examples that have already been given in part (a), and then referred to in part (b), should be rewarded.
Examiners should be aware that candidates may take a different approach which, if appropriate, should be rewarded.
Assessment Criteria
Part (b) 15 marks
Although relatively few students chose to do this question, there were some good answers to this question part. The best responses effectively explained the different types of aid and the nature of economic development. These responses went on to explain how aid can promote development by, for example, filling the savings gap and providing funds for investment which is an important foundation for economic development. Strong answers used effective real-world examples to illustrate how aid can promote development and evaluated this by considering the problems of using aid such as dependence and misuse of funds. Lower-achieving responsestended to be too general and did not use specific enough terminology.