Photo AI
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. This is deduced from the graph, where it can be seen that every year, there's a correlation between France's GDP falling and Germany's GDP also falling.
- Option A cannot be confirmed as no information about inflation is provided in the graph.
- Option B is incorrect because Germany's GDP is larger than France's for every year shown.
- Option D is also incorrect since the GDP of both countries actually 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, use the formula:
ext{Percentage Change} = rac{ ext{Change}}{ ext{Original}} imes 100From the graph, Germany's GDP in 2016 was 3.50 trillion USD and in 2017 was 3.69 trillion USD. Thus:
Change = 3.69 - 3.50 = 0.19
Applying the values:
ext{Percentage Change} = rac{0.19}{3.50} imes 100 \\ = 5.43\% ext{ or rounded as } 5.4\%.Step 3
Explain one reason why Purchasing Power Parities are used.
Answer
Purchasing Power Parities (PPP) are used to improve the accuracy when comparing data between different countries.
PPP accounts for differences in price levels across countries by comparing the cost of a package of comparable goods and services. This allows for a more equitable comparison of economic productivity and standards of living.