Examine two likely benefits for the Rwandan economy of the growth in the country’s population

Edexcel A-Level Economics Paper 2 June 2021 Extract

With reference to the information provided, examine two likely benefits for the Rwandan economy of the growth in the country’s population. (8 marks)

One likely benefit from population growth is an increase in the rate of economic growth. Rwanda's population grew from 9.5 million in 2008 to 12.3 million in 2018. As the population grows, more people need to satisfy their needs and wants and maximise their living standards, so they are likely to increase consumption, leading to more aggregate demand and therefore more economic growth.

Another likely benefit of more population is an increase in the productive potential of the economy. As the population grows, the size of the labour force increases. This gives firms more bargaining power and allows them to choose the most skilled workers, and also pay less. This allows them to produce more output when they are their capacity.

However, an increase in population can also cause problems such as declining living standards. As the population increases, labour supply increases, and wages decrease. This means more families will struggle to pay for food and healthcare services.

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