Economics Model Answers | Assess the importance of higher labour productivity in bringing about improvements to UK macroeconomic performance

Labour Productivity | Model Answer

A-level Economics

Assess the importance of higher labour productivity in bringing about improvements to UK macroeconomic performance. (25 marks)


Here is a question and answer from the national economy section of the A-level Economics syllabus.

This question is an ‘assess’ question - the type of question students need to practice their exam technique. In some exam boards, this is the ‘25 marker’.

I have seen so many capable students drop a few marks on these sorts of questions simply because they do not evaluate the scenario with enough scope.


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Assess the importance of higher labour productivity in bringing about improvements to UK macroeconomic performance. 


Use the data and your economic knowledge to help you.


The question asks you to assess why higher labour productivity might improve the UK’s economy. You should try and structure an argument around reasons why labour productivity would improve the UK economy and also outline the considerations of a higher productive labour force. Throughout, you should aim to explain your points using economic theory and the extracts. You should also look to consider the weight of your points (evaluation).


FREE Model Answer Guide - Information in this extract


Possible Definitions

Reasons why a more productive labour force would benefit the UK economy

Why is labour productivity important for UK macroeconomic performance?

  • Link labour productivity to the theory of AD/AS - draw diagram

How can better labour productivity bring about higher real GDP?

  • Think about the diagram drawn and the definition of labour productivity

  • Think about what labour productivity might mean for investment, particularly FDI

How can better labour productivity bring about better inflation rates?

  • Think about the diagram drawn and relate this to inflation.

  • How might prices change when labour productivity goes up? 

How can better labour productivity bring about lower unemployment figures?

  • Think about what better productivity means for employers.

  • Why do employers hire people in the first place?

  • What does unemployment depend on?

  • Does it just depend on labour productivity or anything else?

How can better labour productivity improve the UK balance of payments?

  • Think about what sub-accounts the balance of payments consists of

  • Think about what the current issue is with the UK’s balance of payments

  • Is there an existing problem in the UK? How might better labour productivity improve this? What’s the likelihood of this?



Why is labour productivity not so important for UK macroeconomic performance?

  • Are there any drawbacks to boosting labour productivity? How does a country’s labour productivity increase in the first place?

  • Is labour productivity the key issue in the UK economy or are there other issues to consider?

  • How might a government manage policies aimed at boosting productivity? Is it a guarantee - is it risk-free? What are the challenges involved?

DIAGRAMS YOU COULD USE

  • LRAS shifting outwards due to increases in labour productivity


EVALUATION STATEMENTS

  • Consider the magnitude of the change in productivity

  • Consider the likelihood of increased productivity having a real-world improvement and if this would be measurable or negligible

  • Consider what other variable/s might be needed to boost macroeconomic performance


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