Lesson 2.1.1

2.1.1 Economic growth Quiz: Pearson Edexcel Economics A, Unit 2

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

In partnership with Revision Ninja

Lesson 2.1.1, Economic growth: 20 multiple choice questions for the Pearson Edexcel Economics A (9EC0), Unit 2: Theme 2: The UK economy – performance and policies, written with Revision Ninja.

Host it live on the board and students join with a game code on their own devices, or revise alone with Free Play. The answers are revealed in the game.

Host this setFree Play

The 20 questions

  1. Which measure is used to show the rate of economic growth in an economy?

    • The change in the number of people in employment each year
    • The change in the average price level measured by the CPI
    • The percentage change in real GDP over a period of time
    • The percentage change in nominal GDP over a period of time

  2. Converting nominal GDP into real GDP requires which adjustment?

    • Dividing nominal GDP by a price index to remove the effect of inflation
    • Adding the unemployment rate to nominal GDP to allow for lost output
    • Subtracting the value of imports from nominal GDP to get domestic output
    • Multiplying nominal GDP by the sterling exchange rate against the dollar

  3. GDP per capita is calculated by:

    • Subtracting government spending from GDP and dividing by the population
    • Dividing total GDP by the size of the population
    • Dividing total GDP by the number of people in employment only
    • Multiplying total GDP by the number of people in the labour force

  4. Which statement correctly distinguishes Gross National Income (GNI) from GDP?

    • GNI adds net income received from abroad by residents and firms to GDP
    • GNI excludes all income from property and investment held overseas
    • GNI equals GDP minus the depreciation of the capital stock
    • GNI counts only the output produced by foreign-owned firms located within the country

  5. Purchasing power parity (PPP) adjustments are used in international comparisons to:

    • measure the share of national income that households choose to save each year after paying direct taxes
    • show the value of a country's exports relative to its imports each year, which shows how competitive its goods are abroad
    • allow for price-level differences so that equal amounts of money buy comparable amounts of goods and services
    • convert all national incomes into one currency at the market exchange rate, ignoring price differences between countries

  6. A key limitation of using GDP to compare living standards between countries is that GDP:

    • does not capture unpaid work, the informal economy, environmental damage or the distribution of income
    • is always measured in constant prices, so it ignores inflation completely
    • counts only the output of privately owned firms and so overstates public services
    • is measured only in nominal prices, so it cannot be compared between countries at all

  7. Evidence on national wellbeing and happiness suggests that:

    • national wellbeing is measured fully by the rate of economic growth alone, since growth captures all the things that matter to households
    • real income has no measurable link with reported happiness, because people judge their wellbeing mainly by health and family life
    • happiness rises in direct proportion to GDP per capita at every income level, so each extra pound of income adds the same wellbeing
    • higher real income is associated with higher reported happiness, but the link weakens as incomes rise well above basic needs

  8. Real GDP was 1,000 billion in year 1 and 1,030 billion in year 2. What is the rate of economic growth between the two years?

    • 30%
    • 1.03%
    • 103%
    • 3%

  9. Nominal GDP rises from 2,400 to 2,520 billion while the price index rises from 100 to 105. Approximately what is the real GDP growth rate?

    • 2.5%
    • -5%
    • 5%
    • 0%

  10. GDP is 1.2 trillion and the population is 60 million. What is GDP per capita?

    • 200,000
    • 2,000
    • 20,000
    • 72,000,000

  11. If real GDP grows at a steady 2% a year, roughly how many years does it take for real GDP to double? (Use the rule of 70.)

    • 35 years
    • 70 years
    • 50 years
    • 20 years

  12. Real GDP grows by 6% while the population grows by 4%. Approximately what is the growth rate of real GDP per capita?

    • 10%
    • 6%
    • 0.4%
    • about 1.9%

  13. Nominal GDP grows by 7% in a year when the price level rises by 3% and population rises by 1%. Which is closest to the growth rate of real GDP per person?

    • 4.0%
    • 7.0%
    • 3.9%
    • 2.9%

  14. A rise in nominal GDP caused only by higher prices, with output unchanged, is best described as a change in:

    • both volume and value
    • neither value nor volume
    • value but not volume
    • volume but not value

  15. Which measure would be most appropriate for comparing the cost-of-living-adjusted output of two countries?

    • Gross National Income per hour worked
    • PPP-adjusted GDP per capita
    • Nominal GDP per capita at market exchange rates
    • Real GDP per household at constant domestic prices

  16. A government says 3% growth shows that living standards are rising for everyone. Which is the strongest evaluation of this claim?

    • Growth of 3% raises living standards for every household by the same cash amount, so the government's claim needs no further evidence
    • Average growth can hide unequal income distribution, so living standards may rise for some groups but not for others.
    • Growth affects only firms' profits and share prices, so it cannot influence household welfare, employment or the income families receive
    • Growth figures are irrelevant to living standards, because only inflation and the price of basic goods determine how households cope

  17. Why might a country with rapid measured GDP growth still see falling sustainable welfare?

    • Growth may come from depleting natural resources or causing pollution, which GDP does not subtract as a cost
    • GDP measures only consumer spending, so it cannot record any production at all
    • GDP counts environmental damage as a negative, so growth always lowers recorded GDP
    • Rising output always reduces unemployment and therefore raises welfare regardless of other factors

  18. A country's GNI is larger than its GDP. What does this imply?

    • Foreign-owned firms earn more income inside the country than UK residents earn from their own investments and work overseas
    • Residents and firms receive more income from abroad than foreign residents receive from the domestic economy.
    • Government spending is higher than tax revenue, so the budget is in deficit and the national debt must rise by the same amount
    • Depreciation of the capital stock exceeds gross investment, so the capital base is shrinking and output is falling sharply

  19. Nominal GDP rises by 10% and the GDP deflator rises by 4% between two years. Real GDP growth is approximately:

    • 14%
    • 5.8%
    • 10%
    • 0.4%

  20. Why does measuring GDP over long periods require constant (real) prices?

    • Base-year prices allow GDP to be measured in a foreign currency, so exchange rate changes are fully accounted for in every comparison
    • Constant prices remove the need to adjust for population changes between periods, so GDP per head can be compared across years
    • Constant prices make GDP always equal to GNI in every year, so national income and output can be compared directly without adjustment
    • Without constant prices, rising price levels would make nominal GDP grow even if output did not change, overstating growth.

All Pearson Edexcel Economics A quizzes