Extract B
Investing in education and vocational training programmes is critical to solving the productivity puzzle. When governments invest in upgrading technical skills, workers become more efficient. Economic theory suggests that boosting the skills and education of the workforce is essential for sustained economic growth, helping firms stay competitive internationally while driving down long-run average costs.
Extract B states: 'Boosting the skills and education of the workforce is essential for sustained economic growth'.
With the help of an aggregate demand and aggregate supply (AD/AS) diagram, explain how an increase in workforce skills and productivity should lead to an increase in real GDP.
222 exam-style questions on AQA A Level Economics 2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts, covering 2.2.1 The circular flow of income, 2.2.2 Aggregate demand and aggregate supply analysis, 2.2.3 The determinants of aggregate demand, 2.2.4 Aggregate demand and the level of economic activity, 2.2.5 Determinants of short-run aggregate supply, and 2.2.6 Determinants of long-run aggregate supply. Each one has a worked solution and a mark scheme showing where the marks go.