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ACCA Applied Knowledge · Business and Technology · Social and demographic factors

A country's birth rate has fallen steadily for 20 years while life expectancy has risen. Which of the following is the most likely consequence for businesses in that country?

The most likely consequence is increased demand for healthcare and retirement-related services. Falling births and longer life expectancy produce an older population, so more people need medical care and pensions, while the available young workforce shrinks and the tax burden on workers tends to rise.

  1. AA growing pool of young workers, making labour cheaper to recruit
  2. BIncreased demand for healthcare and retirement-related servicesCorrect
  3. CA reduction in the tax burden on the working population

Explanation

Falling births and longer lives shift the age structure towards older groups, raising demand for healthcare, pensions and leisure services aimed at older people. The workforce shrinks relative to dependants, so labour is scarcer and the tax burden on workers tends to rise, not fall.

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