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Economics IGCSEPDF 57
118 pagesrevision 46932
PDF 57
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○
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○
rises, the proportion of
income spent on food falls.
Have a low capacity to save.
High-Income Households:
○ Spend a
lower proportion
of
their income (they save
more).
○ While they spend more in
absolute terms on
necessities, it represents a
smaller percentage of their
total income.
Spend a much higher
proportion of their income on
luxury goods and services
(e.g., holidays,
entertainment, high-end
cars).
Unsolved Past Paper Questions
1. Multiple Choice (Paper 1)
What is most likely to cause a person to save a larger proportion of their income?
A. a rise in the rate of inflation
B. a rise in the rate of interest
C. a rise in their income
D. a rise in the range of products available
2. Structured Question (Paper 2)
(a)
Define ‘disposable income’. [2]
(b)
Explain two reasons why a person’s spending may increase. [4]
(c)
Analyse why people with high incomes are likely to save a higher proportion of
their income than people with low incomes. [6]
(d) Discuss whether or not an increase in taxation on spending is likely to be the
most effective way to increase saving. [8]
Solved Answers
1. Multiple Choice
● Answer: B. a rise in the rate of interest