Economic management — Question 60

Answer
Domestic demand can rise as import leakage falls; an effective port can improve productivity later.

Working
Expenditure switches from an imported purchase to domestic construction. In expenditure accounting the original imported G was offset by M; switching to local production reduces that leakage and increases demand for domestic output. Later, shorter delays and lower shipping costs can raise efficiency and competitiveness. Benefits depend on completion, use and whether the project addresses a genuine bottleneck.

Marking criteria

• Explains the imported-purchase offset and domestic switch. [2 marks]
• Links spending to domestic employment/output. [1 mark]
• Explains a qualified supply-side benefit. [2 marks]