Economic Growth & Recession
Government and the Macroeconomy · 2 question types
Exam Frequency Analysis
Past paper frequency (2018 to 2024)
This topic accounts for approximately 6% of your exam marks.
New emphasis in the 2027 syllabus; economic growth and recession are now a distinct topic, including causes and consequences of recession. Guidance based on specimen materials.
Economic growth is an increase in a country's real Gross Domestic Product (GDP) over time. Real GDP is the total value of all goods and services an economy produces in a year, adjusted for inflation.
Two parts of the definition earn marks. Growth is measured by real GDP, not nominal GDP: nominal GDP can rise simply because prices have gone up, whereas real GDP strips out price changes and measures genuine extra output. And growth is usually thought of as sustained: a single good year followed by a slump is not really an economy that is growing.
Most developed economies aim for steady growth of around 2 to 3% per year: fast enough to raise incomes, slow enough not to trigger excess demand-pull inflation.