What is developed economy

Fresh revision notes for IGCSE- GCSE Economics development economics section on dineshbakshi.com.

What is a developed economy?

Countries with economies in which the tertiary and quaternary sectors of industry dominate are known as developed economies. This level of economic development is usually determined on the following factors:

High income per capita

"High income economies" are defined by the World Bank as countries with a Gross National Income per capita of $11,456 or more. According to the United Nations definition some high income countries may also be developing countries. Thus, a high income country may be classified as either developed or developing.

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Revision notes on IGCSE Economics

Individual spending and saving section is a very important section for Paper 2 in IGCSE Economics. Usually there is a question on this topic every year.

Factors affecting individual expenditure

• Level of income/wealth: An individual with high income will usually spend more than a person whose income is less.
• Family size and commitments: An individual with a large family will end up spending more from his income.
• Rates of interest: When interest rates are high people usually spend less as saving are a more attractive option.
• Availability of/knowledge about savings schemes

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Factors affecting Saving

• Interest rates: Higher interest rates will encourage people to save more.
• Availability of appropriate savings schemes: With more options to save money people will be attracted to save more
• Advertising of/knowledge about what is available at financial institutions
• Confidence/trust in financial institutions
• Size of real disposable income: Disposable income is the income left after paying taxes. Thus more money left in pockets will encourage people to save more.

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