JC Economics Essay Series #65 – High & Sustained Economic Growth

JC Econs Essay High & Sustained Economic Growth Model Answers 

A simple question on the main macroeconomic goal of economic growth, given an injection into an economy due to a major event. In addition, we explore the difficulties of attaining sustainable growth.

The 2022 FIFA World Cup would be held in Qatar, with expected over US100 billion in improved roads, air- and sea-ports and other infrastructure. According to estimates by macroeconomists, Qatar can look forward to a potential reduction in unemployment, quicker recovery from COVID-19 crisis,  and the enhancement of foreign investment and tourism.

(a) Explain the impact of hosting the 2022 FIFA World Cup on the different types of unemployment in Qatar. 
(b) To what extent is a higher rate of economic growth always beneficial for Qatar?


JC Economics – Types of Unemployment in Qatar

Part A Suggested Answer:

 Hosting of the World Cup has brought about significant changes in the Qatar economy. Although it is a one month long event, preparation for the tournament actually started years before 2010 and its effect on the economy may be felt for years to come. To address the unemployment situation”, one should address the different types and causes of unemployment which may be present: mainly cyclical, structural and frictional unemployment. .

Define the various types of unemployment.


The hosting of the World Cup will cause an increase in the various components of aggregate expenditure (AE). Increase in the various components of AE leads to a rise in AE. Through the multiplier process, this leads to a multiplied increase in national income, employment and output. Cyclical unemployment: With a higher level of output, this increases demand for labour in Qatar, leading to a fall in cyclical unemployment. In particular, construction and tourism-related sectors are likely to experience the most significant rise in demand and hence, job creation.
(Sketch AD-AS diagram as an exercise.)


Structural unemployment: Explain how this type of unemployment may have increased/decreased due to the hosting of the World Cup . Frictional unemployment: Explain how structural unemployment may have increased/decreased due to the hosting of the World Cup.
(Frictional unN is not really critical.)


The hosting of the World Cup is able to address unemployment to a certain extent, mainly through the reduction of cyclical unemployment by boosting AE in the economy. The impact on the other types of unemployment is likely to be less significant.


A-Level Economics Mark Scheme

Level 3: Answer shows good knowledge about the effect of hosting the World Cup on the three 7-10 main types of unemployment which Qatar is likely to be experiencing. There is a clear ability to give examples of how skills mismatch and search time for job seekers may be affected by hosting the event.

Level 2: Answer shows knowledge about the effect of hosting the World Cup on components and AD, with a clear link made to cyclical unemployment. However, other types of unemployment may not be considered or well-developed.

Level 1: Answer shows some knowledge about the effect of hosting the World Cup on components 3-4 of AD, but there are basic errors in theory and the link to cyclical unemployment may be unclear, OR Answer is mostly irrelevant with no evidence of understanding about the effect of hosting the World Cup on the economy.



JC Economics – Types of Unemployment in Qatar

Part (b) Suggested Answer:

Define growth: Explain that there are both benefits and costs from a higher rate of growth


Thesis ⇒ Benefits of a higher rate of growth are significant to a developing country like Qatar: Increased consumption and improved standards of living Increased employment and hence better utilisation of resources

Redistribution of income , Promotes business and consumer confidence


Anti-thesis ⇒
On the other hand, there are numerous costs associated with increased growth (only 3 or 4 of the following points are expected):

Impact on structural unemployment, Impact on inflation Environmental costs and depletion of natural resources

Income re-distribution and rising income inequality; Changes in our way of life


Any harmful impact on the environment, such as pollution and congestion, leisure hours even, etc.
Depends n magnitude on FGDI and injections. Maybe inflationary, if there are structural rigidities and bottlenecks.
Etc, etc EV points.


Whether or not countries should pursue growth depends on the costs and benefits involved and what weighting or relative importance society attaches to the various costs and benefits. Overall, given the low level of real national income of the economy and the underutilisation of Qatar’s productive capacity, most would agree that to a large extent, it is still beneficial for Qatar to experience a higher rate of growth. Qatar is a developing country, where economic growth is needed to reduce mass poverty and unemployment. The majority of the population is malnourished, poorly housed and has limited access to healthcare and education, hence the need for an increase in actual growth, sustained by potential growth, is paramount.


However, there are inevitably costs associated with higher growth, even for a developing country such as Qatar. Hence to a smaller extent, growth may not always be beneficial. The distribution of the benefits should also be considered. While growth may be beneficial to the country as a whole, it is another matter whether it benefits the majority of the population or only a minority who own the resources or political power in the country.


JC & A-Level H2 Essay Mark Scheme

Level 3: Answer elaborated on the benefits and costs of higher growth and is balanced. supported with range of contextual examples.

L2: Answer elaborated on the benefits and costs of higher growth but answer tends to be one sided. No or minimal contextual examples given.

Level 1: Answer shows some knowledge of the benefits and costs related to higher growth rate but there is little or no elaboration OR there are major errors and inconsistencies, OR Answer contains a few valid points made Incidentally in an irrelevant context.

E2 (3-4) Well-explained Judgment based on analysis, regarding the extent of benefits and costs of growth to Qatar.

E1 (1-2) Unexplained judgment on the extent of benefits and costs of growth to Qatar


More essay answers: Econs Essay #64 | Econs Essay #66