Quick Economics Macroeconomics AS Multiple Choice Question

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creativebuzz
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The correct answer is B, could someone please explain why?
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Dylann
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Nominal (with inflation) GDP is 8%, inflation is 5.5%, so take away inflation 8.5-5.5 = 2.5% REAL growth, but since the population grew by 2.5% as well there is no change in GDP PER CAPITA.

gdp per capita = GDP/population

Can you see that if GDP increases by a certain percent and population increases by the same percent they will stay the same? Therefore GDP per capita remains the same...

If they increase by the same amount then there will be no change...i.e. x/y = x times z/y times z

in this case z was 1.025 since they both grew by 2.5%...


(Original post by creativebuzz)
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The correct answer is B, could someone please explain why?
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creativebuzz
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(Original post by Dylann)
Nominal (with inflation) GDP is 8%, inflation is 5.5%, so take away inflation 8.5-5.5 = 2.5% REAL growth, but since the population grew by 2.5% as well there is no change in GDP PER CAPITA.

gdp per capita = GDP/population

Can you see that if GDP increases by a certain percent and population increases by the same percent they will stay the same? Therefore GDP per capita remains the same...

If they increase by the same amount then there will be no change...i.e. x/y = x times z/y times z

in this case z was 1.025 since they both grew by 2.5%...
Ah that makes sense, thank you!

If you don't mind me asking, but do you have any tips on how to revise economics? I seem to understand the content very easily but I forget the content constantly!
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Dylann
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(Original post by creativebuzz)
Ah that makes sense, thank you!

If you don't mind me asking, but do you have any tips on how to revise economics? I seem to understand the content very easily but I forget the content constantly!
Very common problem that I experienced last year during AS...I think possibly reading textbooks/notes/revision guides on the bus in the morning really helps...I read ahead sometimes before lessons and read what we did last lesson which helped me take in the new information much more easily...otherwise just take this half term to go over everything you've learned and use the specification as a checklist. Look online for your exam board specification and use that to revise!

If you need any help just ask...
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creativebuzz
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(Original post by Dylann)
Very common problem that I experienced last year during AS...I think possibly reading textbooks/notes/revision guides on the bus in the morning really helps...I read ahead sometimes before lessons and read what we did last lesson which helped me take in the new information much more easily...otherwise just take this half term to go over everything you've learned and use the specification as a checklist. Look online for your exam board specification and use that to revise!

If you need any help just ask...
Ah thank you!

In fact, there is one thing I'm stuck on, I can't seem to figure out how to answer this question with two graphs:

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PAPADAPADOPOLOUS
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(Original post by creativebuzz)
Ah thank you!

In fact, there is one thing I'm stuck on, I can't seem to figure out how to answer this question with two graphs:

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Ok, Lets assume that we are operating at the full employment level of output.
-Then LRAS Shifts to the right (Increase in underlying trend rate of growth)
-AD Shifts to the right (rise in AD)
-As the AD increase is less than LRAS increase, negative output gap appears.
-Negative output gap appears = rise in unemployment, then just explain why.


Or you can show it on a trade cycle diagram, where a small amount of economic growth leads to a bigger negative output gap.
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