Photo AI
UK real Gross Domestic Product (GDP), annual percentage change 2014–2017 Total real UK GDP in 2016 was £200,000 million - Edexcel - A-Level Economics A - Question 1 - 2021 - Paper 2
Question 1
UK real Gross Domestic Product (GDP), annual percentage change 2014–2017 Total real UK GDP in 2016 was £200,000 million. With reference to the chart above, calculat... show full transcript
Worked Solution & Example Answer:UK real Gross Domestic Product (GDP), annual percentage change 2014–2017 Total real UK GDP in 2016 was £200,000 million - Edexcel - A-Level Economics A - Question 1 - 2021 - Paper 2
Step 1
Total real UK GDP for 2017
Answer
To calculate the total real UK GDP for 2017, we start with the GDP for 2016, which is £200,000 million. From the chart, we can see that the percentage change in GDP from 2016 to 2017 is 1.7%.
The formula for calculating GDP for 2017 is:
GDP_{2017} = GDP_{2016} imes (1 + rac{ ext{Percentage Change}}{100})
Substituting the values:
GDP_{2017} = 200,000 imes (1 + rac{1.7}{100})
Calculating that gives:
Thus, the total real UK GDP for 2017 is £203,400 million.
Step 2
Explain the term 'real gross domestic product'
Answer
Real Gross Domestic Product (GDP) is an inflation-adjusted measure that reflects the value of all goods and services produced in a country over a specific period of time, typically a year. It is calculated by taking the nominal GDP and adjusting it for changes in price level, which allows economists and policymakers to evaluate the economic performance without the distortive effect of inflation.
Real GDP provides a more accurate representation of an economy's size and how it is growing over time, making it a critical indicator for assessing the economic health of a country.
Step 3
With reference to the chart on page 2, which one of the following is correct over the period shown?
Answer
The correct answer is D) The UK economy was in recession in 2015. This can be inferred from the decline in GDP percentage change in 2015, which is lower compared to the previous year. Hence, it indicates a contraction in economic activity during that year.