Edexcel A Level Economics A
Edexcel A Level Economics A 2.5 Economic Growth Exam Questions
Free Edexcel A Level Economics A exam questions on 2.5 Economic Growth, with mark schemes. Covers actual and potential growth, output gaps and the trade cycle.
2.5 Economic Growth exam questions
1 question pack of real past exam questions with its mark scheme. Answer every question without notes, then mark your answers line by line against the mark scheme.
StemUp mark scheme flashcards
Edexcel A Level Economics A 9EC0 Flashcards (Anki & Quizlet)
Every answer is written in mark scheme wording, so you learn exactly what examiners give marks for. Use them on Anki or Quizlet, then test yourself with the questions on this page.
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About Edexcel A Level Economics A 2.5 Economic Growth
2.5 covers what causes growth and why it is not always good. Exam questions often ask you to evaluate the costs and benefits of growth for different groups.
What you need to know
- Causes of growth Actual growth comes from rising AD. Potential growth comes from rising LRAS. International trade is a cause of growth too.
- Output gaps A positive output gap is when actual output exceeds potential output and a negative output gap is when it is below. Output gaps are hard to measure.
- Trade cycle Boom, recession, recovery and slump. Know the characteristics of each phase and the possible causes of booms and recessions.
- Impact of growth Benefits and costs for consumers, firms, government, living standards and the environment, now and in the future.
Common mistakes in 2.5 Economic Growth
- Using "growth" when the question means potential growth rather than actual growth.
- Saying a positive output gap means the economy is healthy without noting inflationary pressure.
- Describing a recession only as "a bad time" rather than two consecutive quarters of negative growth.
- Ignoring environmental costs when evaluating growth.
Try three 2.5 Economic Growth exam-style questions
1. Define a negative output gap. (2 marks)
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When actual output is below the potential output of the economy (1), meaning there is spare capacity such as unemployed resources (1).
2. Explain one benefit of economic growth for the government. (2 marks)
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Higher incomes and spending raise tax revenue (1) and reduce spending on unemployment benefits, improving the budget position (1).
3. Explain one cost of rapid economic growth. (2 marks)
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Rapid growth can cause demand-pull inflation if AD rises faster than productive capacity (1), or environmental damage such as pollution and resource depletion (1).
2.5 Economic Growth FAQs
What does Edexcel A Level Economics 2.5 cover?
The causes of growth, output gaps, the trade cycle and the costs and benefits of growth.
What is the difference between actual and potential growth?
Actual growth is a rise in real GDP. Potential growth is a rise in the productive capacity of the economy.
How is a recession defined?
Usually as two consecutive quarters of negative real GDP growth.
Revise this topic with flashcards: Edexcel A Level Economics A 9EC0 Flashcards, with mark scheme answers for Anki and Quizlet.
