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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 be deduced? A - 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 b... show full transcript
Worked Solution & Example Answer: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 be deduced? A - 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 only correct answer is C. This is because we can observe that every time France's GDP decreased from the previous year, Germany's GDP did not follow the same pattern of decline—indicating a correlation between the two.
- A is incorrect as the graph provides no information on inflation rates.
- B is incorrect since Germany's GDP is continuously higher than France's, contradicting the statement.
- D is also incorrect as the GDP for both countries actually grew 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:
ext{Percentage Change} = rac{ ext{New Value} - ext{Old Value}}{ ext{Old Value}} imes 100In this case:
- New Value (2017 GDP) = 3.69 trillion USD
- Old Value (2016 GDP) = 3.50 trillion USD
Substituting the values:
ext{Percentage Change} = rac{3.69 - 3.50}{3.50} imes 100 = rac{0.19}{3.50} imes 100 \n= 5.43\% ext{ approximately } 5.4\%.Step 3
Explain one reason why Purchasing Power Parities are used.
Answer
Purchasing Power Parities (PPPs) are used to improve the accuracy when comparing data between different countries. This consideration is crucial because it accounts for variations in cost of living and the purchasing power of currencies, thus providing a more accurate representation of economic productivity and living standards across nations.