QUESTION 86 (5 marks)
Real GDP per capita rises 2%, but a supplied distributional study shows median real disposable income is unchanged and the lowest-income group’s income falls. Evaluate the claim that all households have become better off.
Practice marking scheme
Answer
The average production measure does not support a claim that every household benefits.
Working
Higher real output per person is consistent with more aggregate resources, but it is an average production measure, not each household’s disposable income. The median is unchanged and the poorest group loses income, indicating unequal gains. Living standards also depend on public services, employment, leisure and environmental quality. Assess distribution and the relevant household outcomes before claiming universal improvement.
Marking criteria
- Distinguishes average output from household incomes. [2 marks]
- Uses both distributional observations. [2 marks]
- Identifies another meaningful living-standards consideration. [1 mark]
Practice question aligned to the current QCAA syllabus; review the worked solution and marking criteria.
View the QCAA syllabusCompare your working with the guide above.