Question:

2 Botswana uses both capital goods and labour in its diamond mining industry. The country had an
average economic growth rate of 3.8% between 2015 and 2019 compared to a global average
of 2.8%. Over this period, the country experienced a low inflation rate and a move away from
protectionism and towards free international trade.
(a) Define, with an example, a capital good. [2]
(b) Explain two reasons why a low inflation rate may increase a country’s economic growth rate.
[4]
(c) Analyse how a government could reduce protectionism and move towards free international
trade. [6]
(d) Discuss whether or not a country will benefit from diamond mining. [8]

Sample Answers: