Economic Growth | Edexcel A-Level Economics A (9EC0)
Economic Growth
- 98 questions
- 7 subtopics
- Theme 2: the UK economy, performance and policies
- Paper 2 and Paper 3
Covers why economies grow and why growth is uneven: the causes of actual and potential growth, output gaps, the four phases of the trade cycle, and the costs that come with rising output..
It covers what causes economic growth, actual against potential growth, and export-led growth, trend growth and positive and negative output gaps, identifying an output gap on an AD/AS diagram, the four phases of the trade cycle, and the boom, recession, recovery and the output gap and the impact of economic growth.
Sample questions from Economic Growth
Answer each one closed book first, then open the answer.
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What causes economic growth
How does an increase in enterprise contribute to economic growth?
Show the answer
More entrepreneurs create new businesses, introduce innovations, and combine other factors of production more effectively, raising output. -
What causes economic growth
How does an increase in government spending contribute to economic growth?
Show the answer
Higher government expenditure raises aggregate demand, leading to increased output and employment. -
Actual against potential growth, and export-led growth
Can an economy experience potential growth without experiencing actual growth? Explain how this is possible.
Show the answer
Yes. Potential growth can occur without actual growth if new productive capacity remains unused because aggregate demand is insufficient to utilise that capacity. -
Actual against potential growth, and export-led growth
Explain how access to larger markets through international trade promotes economic growth.
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Larger markets enable firms to benefit from economies of scale, reducing average costs and increasing output. -
Trend growth and positive and negative output gaps
What is a positive output gap?
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A positive output gap occurs when actual GDP exceeds potential GDP, meaning the economy is operating above its sustainable capacity. -
Trend growth and positive and negative output gaps
Why does a negative output gap put downward pressure on inflation?
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Because there is excess capacity and underutilised resources, meaning supply can easily meet demand without upward pressure on prices. -
Identifying an output gap on an AD/AS diagram
How can you identify a positive output gap by comparing the AD/SRAS equilibrium to the LRAS curve?
Show the answer
A positive output gap exists when the equilibrium point where AD intersects SRAS occurs at a higher level of real output than the level shown by the LRAS curve. -
Identifying an output gap on an AD/AS diagram
How is the size of an output gap represented on an AD/AS diagram?
Show the answer
The size of the output gap is represented by the horizontal distance between the equilibrium output level and the LRAS curve.
The 7 subtopics
One subtopic is one session. Work down the list.
| Subtopic | What it covers | Questions |
|---|---|---|
| What causes economic growth | Recall questions on the factors of production, investment, technology and the components of aggregate demand as causes of growth. | 14 |
| Actual against potential growth, and export-led growth | Recall questions on the difference between the two kinds of growth, how each appears on a PPF, and how trade drives growth. | 17 |
| Trend growth and positive and negative output gaps | Recall questions on the long-term trend rate, what a positive and a negative output gap mean, and why output gaps are hard to measure. | 15 |
| Identifying an output gap on an AD/AS diagram | Recall questions on locating actual and potential output on an AD/AS diagram and reading the size of the gap. | 9 |
| The four phases of the trade cycle, and the boom | Recall questions on the phases of the cycle and on what happens to output, unemployment, inflation, confidence and the budget in a boom. | 12 |
| Recession, recovery and the output gap | Recall questions on the technical definition of a recession, what happens through it and the recovery, and which output gap belongs to each phase. | 11 |
| The impact of economic growth | Recall questions on the benefits of growth for living standards and public finances, set against inequality, inflation and environmental cost. | 20 |
How the guide is worked
Answering a question from memory stores it far better than reading the answer again. The guide runs that as a fixed procedure on one subtopic at a time, about twenty minutes a session.
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Step 1 · Closed book
Cover the answers. Work through one subtopic and write down what you can. Leave blanks where you have nothing.
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Step 2 · Open book
Go back to the top. Read each printed answer and write it out in full, including the ones you had right.
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Step 3 · Closed book again
Same questions, same order, from memory. The gap between pass one and pass three is the session result.
Read the full method, the return schedule and the research behind it.
Nearby topics
Edexcel A-Level Economics A Active Recall Guide
Every topic, not just this one. 2,508 questions with their answers.