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GDP at Purchasing Power Parities, Germany and France (nominal, trillions of US dollars) 2010–2017 - Edexcel - A-Level Economics A - Question 5 - 2021 - Paper 2
Question 5
GDP at Purchasing Power Parities, Germany and France (nominal, trillions of US dollars) 2010–2017. From the data in the graph above, which one of the following may ... show full transcript
Worked Solution & Example Answer:GDP at Purchasing Power Parities, Germany and France (nominal, trillions of US dollars) 2010–2017 - Edexcel - A-Level Economics A - Question 5 - 2021 - Paper 2
Step 1
From the data in the graph above, which one of the following may be deduced?
Answer
The correct answer is C: 'In every year that France’s GDP fell compared to the previous year, Germany’s GDP did too.' This can be deduced by observing the trends in the graph that show similar patterns of GDP fluctuations for both countries.
Option A is incorrect as we lack inflation data for either country. Option B is incorrect since Germany’s GDP exceeds France’s in all years presented. Option D is also incorrect as both countries' GDPs generally increased from 2015 to 2016.
Step 2
Calculate the percentage change in Germany’s nominal GDP from 2016 to 2017.
Answer
To calculate the percentage change, we use the formula:
\text{% change} = \frac{\text{change}}{\text{original}} \times 100
From the graph, Germany’s GDP in 2016 is 3.50 trillion and in 2017 is 3.69 trillion.
Therefore,
Calculating the percentage change:
\text{% change} = \frac{0.19}{3.50} \times 100 \approx 5.43\%
Thus, the percentage change in Germany’s nominal GDP from 2016 to 2017 is approximately 5.4%.
Step 3
Explain one reason why Purchasing Power Parities are used.
Answer
Purchasing Power Parities (PPP) are used to improve accuracy when comparing the economic data between different countries. They account for the differences in cost of living and purchasing power, providing a clearer picture of economic status by comparing the price of a consistent basket of goods and services across nations.