OCR A Level Economics: Economic growth, GDP and recession (H460) – Practice Questions

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs – examination boards hold copyright in their own papers. Use these alongside the official past papers from your board or school.

These questions cover the growth part of Economic growth and development in Component 2, Macroeconomics, of the OCR A Level Economics (H460) specification, Version 3.0 (June 2026), for first assessment in 2021. All countries and data are invented and illustrative. Teaching is in the study guide and the revision notes. See the OCR Economics hub, the printable checklist and the free 10-minute diagnostics.

Questions

1. Classify each activity in Country H as primary, secondary or tertiary: a dairy farm, a bakery making bread, and a private tutoring centre. [3]

2. Country H’s nominal GDP is 850 billion units in year 1 and 918 billion in year 2. Its price index stands at 100 in year 1 and 108 in year 2.

(a) Calculate nominal growth and real growth between the two years. [3] (b) Comment on what the figures show. [1]

3. In year 1 Country J has real GDP of 1,500 billion units and a population of 25.0 million. In year 2 real GDP is 1,545 billion units and the population is 25.5 million.

(a) Calculate real GDP per capita in each year. [2] (b) Work out the percentage change in real GDP per capita. [1] (c) Explain why this is lower than the growth in real GDP. [1]

4. Real GDP in Country K, as an index over five quarters, is 250.0, 248.5, 247.2, 247.9 and 250.6.

(a) Calculate the growth rate in quarter 2 and in quarter 3. [2] (b) State whether Country K was in recession, giving a reason. [1] (c) Calculate how far output in quarter 4 is below its starting level. [1] (d) State the first quarter in which output was back above its starting level. [1]

5. Explain the difference between short-run and long-run growth, using a PPF/C and an AD/AS diagram in your answer. [6]

6. Explain two difficulties in measuring GDP as an indicator of economic growth. [6]

7. Evaluate the view that investment in education is the most important cause of long-run growth in an economy. [8]

8. Evaluate the consequences of a recession for an economy. [8]

9. Country L’s real GDP grows by 5% every year for ten years. Its population grows by 1% a year and its carbon dioxide emissions grow by 4% a year.

(a) Calculate the percentage increase in real GDP over the ten years. [2] (b) Calculate the percentage increase in real GDP per capita over the ten years. [2] (c) Calculate the percentage increase in emissions, and the percentage change in emissions per unit of real GDP. [2] (d) Evaluate whether this growth is worth its costs. [4]

10. Country M’s nominal GDP over four years is 600, 642, 689 and 727 billion units. The price index is 100, 104, 109 and 112.

(a) Calculate real GDP in years 2, 3 and 4. [2] (b) Calculate cumulative nominal growth and cumulative real growth from year 1 to year 4. [2] (c) Explain why the two figures differ. [2]

11. Country N’s real GDP is 900 billion units in 1990 and 1,200 billion in 2024. Sector shares were: primary 18%, secondary 30%, tertiary 52% in 1990; primary 7%, secondary 25%, tertiary 68% in 2024.

(a) Calculate the value of primary output in each year and its percentage change. [3] (b) Evaluate the relationship between growth, this change of structure and sustainable development. [5]

Answers

1. Dairy farm: primary [1]. Bakery making bread: secondary [1]. Tutoring centre: tertiary [1]. [3] Examiner insight: Name the sector for each activity and link it briefly to what the sector does (extracting, making, serving).

2. (a) Nominal growth = (918 - 850) / 850 x 100 = 8.0% [1]. Real GDP in year 2 = 918 / 108 x 100 = 850 [1]. Real growth = (850 - 850) / 850 = 0% [1]. [3] (b) The whole rise in nominal GDP reflects higher prices; no more was produced [1]. Examiner insight: Show the deflating step as well as the final figure, and use the word “real” in the conclusion; answers that stop at 8% have not removed the effect of prices.

3. (a) Year 1: 1,500 billion / 25.0 million = 60,000 [1]. Year 2: 1,545 billion / 25.5 million = 60,588.24 [1]. [2] (b) (60,588.24 - 60,000) / 60,000 x 100 = 0.98% [1]. (c) Real GDP grew by 3.0% but population grew by 2.0%, so output per head grew by much less [1]. Examiner insight: Show population in the same units as GDP before dividing; mixing billions and millions is a common slip that wrecks every later figure.

4. (a) Quarter 2: (248.5 - 250.0) / 250.0 = -0.6% [1]. Quarter 3: (247.2 - 248.5) / 248.5 = -0.52% [1]. [2] (b) Yes: two consecutive quarters of negative growth (quarters 2 and 3) [1]. (c) (247.9 - 250.0) / 250.0 x 100 = -0.84% [1]. (d) Quarter 5 (250.6 is above 250.0) [1]. Examiner insight: A recession verdict is stronger when it cites the rule used and the quarters that meet it; “output fell” alone is thin.

5. Short-run growth is a rise in actual output using spare capacity [1]. On a PPF/C it is a move from a point inside the curve towards the curve [1]. On AD/AS it is a rightward shift of AD along SRAS, raising real output (and the price level, more so near capacity) [1]. Long-run growth is a rise in potential output [1]. On a PPF/C the whole curve shifts outwards [1]. On AD/AS the LRAS curve (and usually SRAS) shifts right, raising full-capacity output [1]. [6] Examiner insight: Say where each curve sits and which way it moves (price level, real output, LRAS, PPF/C); a description that never locates the shift stays thin.

6. First difficulty, for example the informal economy: cash-in-hand work and unreported output go unrecorded [1], so GDP understates output and comparisons are distorted where informal activity differs in size [1], which could make growth look different from reality [1]. Second difficulty, for example externalities: spending to repair pollution or storm damage counts as output [1], so GDP may overstate the rise in welfare [1], because resources used to repair damage give no net gain in living standards [1]. [6] Examiner insight: State the direction of bias and why it matters for growth or comparisons; a list of four problems with one line each rarely does this.

7. Education raises human capital and productivity [1]. This raises potential output, shifting LRAS or the PPF/C outwards [1]. Other causes also raise capacity: investment in capital equipment, technology, resources and better institutions [1]. Education also raises the ability to adopt new technology [1]. Evaluation: education takes many years to pay off, and graduates need jobs and capital to work with [1]. Poor institutions or low investment may limit returns more than skills [1]. Where unemployment is high the short-run constraint may be demand, not skills [1]. Judgement: education is among the major long-run causes, but its importance depends on whether it is combined with investment, technology and sound institutions [1]. [8] Examiner insight: Strong evaluation compares education with a rival cause and reaches a conclusion, instead of saying only that “other factors matter”.

8. Falling output reduces incomes and spending [1]. Firms cut jobs, so unemployment rises, with possible long-term unemployment and skills loss [1]. Profits and investment fall, which reduces future capacity [1]. Tax revenue falls and welfare spending rises, widening the budget deficit [1]. Evaluation: severity depends on depth and length; a short, shallow fall differs from a long deep one [1]. Depends on cause: a demand collapse differs from a supply shock [1]. Lower demand cuts imports and inflation, and weaker firms may exit, which can help efficiency in the long run [1]. Judgement: effects are usually negative and larger when unemployment persists, but policy response and starting position affect how serious it is [1]. [8] Examiner insight: Chains such as “output falls, so jobs fall, so spending falls” show analysis; a view on which consequence matters most supports a judgement.

9. (a) 1.05^10 = 1.6289 [1], so an increase of 62.9% [1]. [2] (b) Real GDP per capita factor = 1.6289 / 1.01^10 = 1.6289 / 1.1046 = 1.4746 [1], an increase of 47.5% [1]. [2] (c) Emissions factor = 1.04^10 = 1.4802, an increase of 48.0% [1]. Emissions per unit of real GDP: 1.4802 / 1.6289 = 0.9087, a fall of 9.1% [1]. [2] (d) Benefits: real output per head up by almost half, so higher living standards and more tax revenue [1]. Cost: total emissions rise by 48%, even though they fall per unit of output, so environmental harm grows [1]. Judgement depends on the harm done by emissions and whether output is cleaner each year [1]. Conclusion supported by data: growth that is 9.1% cleaner per unit of output is not yet sustainable if total emissions continue to rise [1]. [4] Examiner insight: Bring your own results into the judgement (a 48.0% rise set against a 9.1% fall per unit); evaluation that stays general ignores the data supplied.

10. (a) Real GDP = nominal / index x 100 [1]: year 2 = 617.31, year 3 = 632.11, year 4 = 649.11 [1]. [2] (b) Nominal growth = (727 - 600) / 600 = 21.2% [1]. Real growth = (649.11 - 600) / 600 = 8.2% [1]. [2] (c) Nominal GDP is valued at each year’s prices, so it includes price rises [1]. The price index rose by 12%, which accounts for most of the gap between 21.2% and 8.2% [1]. [2] Examiner insight: Work with the base year consistently (year 1 as 100) and say which year’s prices real GDP is measured in; mixing years is the usual error.

11. (a) 1990: 18% x 900 = 162 [1]. 2024: 7% x 1,200 = 84 [1]. Change = (84 - 162) / 162 x 100 = -48.1% [1]. [3] (b) Real GDP rose by one third while primary output fell sharply, and tertiary rose from 468 to 816 [1]. Structural change shifts resources to services, which usually use fewer natural resources, so growth may be more compatible with sustainable development [1]. Higher income can fund investment in clean technology, education and infrastructure for future generations [1]. But a falling primary sector may mean job losses in some regions, and services depend on energy and imports, so impacts may be moved abroad [1]. Judgement: the relationship depends on what drives the growth and how the gains are used; structural change helps only if resources are protected and gains are shared [1]. [5] Examiner insight: Link the structural data to sustainable development explicitly (resource use, future generations); describing the shift without that link leaves the question unanswered.

Where marks are usually lost

• Stating money-value growth when the question is about real output.
• Dividing by the index but forgetting to multiply by 100 (or the reverse).
• Mixing billions and millions when calculating GDP per capita.
• Describing a diagram in vague terms instead of naming axes and shifting curves.
• Listing difficulties of measuring GDP without saying whether it overstates or understates.
• Giving a recession verdict without citing the quarters or rule used.
• Evaluating in general terms rather than using the figures in the question.

Next steps

• Review the revision notes and the study guide.
• Visit the OCR Economics hub and the printable checklist.
• Try all free 10-minute diagnostics.
• Book a free trial class: /trial/.

Official syllabus

These questions follow the OCR A Level in Economics (H460) specification, Version 3.0 (June 2026), for first assessment in 2021, published by OCR (Oxford Cambridge and RSA Examinations).