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Market Economic System and Living Standards


Discuss whether or not a market economic system improves living standards.


Economic Systems

Cambridge IGCSE – May/June 2022

Preview Answer

I. 🍃Introduction
- Definition of economic freedom
- Importance of economic freedom in improving living standards

II. Economic freedom improves living standards
- Consumers and producers can make their own decisions
- No government intervention enables more efficient allocation of resources
- Firms react to the wants of consumers to gain profits
- Lower costs and prices make goods more affordable

III. Economic freedom does not improve living standards
- Instability and uncertainty
- Unemployment during recessions
- High inflation decreases affordability
- Monopolies exploit consumers
- Low wages for workers
- Pollution and other external costs
- Unequal distribution of income and wealth
- Under provision of public goods

IV. 👉Conclusion
- Economic freedom has both positive and negative effects on living standards
- Importance of balancing economic freedom with government intervention to address negative effects.

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