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IB Economics HL 3.3.1 Economic Growth Questions

Practise 3.3.1 Economic growth in IB Economics HL by reviewing the concepts and applying them to marked questions.

Syllabus
First assessment 2022
Course
Economics HL
Level
HL

Exam points

  • Short-term growth includes actual growth in the PPC model and AD-driven increases in real output
  • Long-term growth includes outward PPC shifts and LRAS-driven increases in full employment output
  • Economic growth is measured using growth rates
  • Diagram: PPC showing actual growth and growth in production possibilities
  • Diagram: AD increase showing higher real output

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Study 3.3.1—Economic growth conceptsOpen the corresponding Concept lesson for explanations, examples and exam connections.

IB Economics HL 3.3.1 Economic Growth Questions question 1

[Maximum number: 1]

Table 1 shows the gross domestic product (GDP) of the United States of America (USA) economy from 2020 to 2023. The USA is not the fastest growing economy in the world, but it is the largest. It also has the largest budget deficit and the largest current account deficit in the world. As a result, the actions of its central bank, the Federal Reserve, always make news.

Table 1

Table 1

Using Table 1, calculate the annual GDP growth rate for 2023. Enter your result in Table 1.

The Federal Reserve has a target inflation rate of 2 %.
The US Bureau of Labor Statistics, however, recorded that the inflation rate from January 2023 to January 2024 was 3.1 \%, well above the target rate. Over the same period, households in the USA could borrow money from a commercial bank at a nominal interest rate of 8.5 %.

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