In 2021, an economy operating at full capacity on its long-run aggregate supply curve grew at its trend growth rate of 4% per annum. It had a national income of £300 billion. In 2022, the economy experienced 1% actual growth.
It follows that in 2022 there was
a negative output gap equal to £3 billion.
a negative output gap equal to £9 billion.
a positive output gap equal to £3 billion.
a positive output gap equal to £9 billion.
327 exam-style questions on AQA A Level Economics 2.3 Economic performance, covering 2.3.1 Economic growth and the economic cycle, 2.3.2 Employment and unemployment, 2.3.3 Inflation and deflation, and 2.3.4 Possible conflicts between macroeconomic policy objectives. Each one has a worked solution and a mark scheme showing where the marks go.