The table below shows index numbers for an economy's real GDP and manufacturing output between 2015 and 2024, with 2015 chosen as the base year (2015=1002015 = 1002015=100).
| Year | Real GDP Index (2015=1002015 = 1002015=100) | Manufacturing Output Index (2015=1002015 = 1002015=100) |
|---|---|---|
| 2015 | 100 | 100 |
| 2018 | 108 | 104 |
| 2021 | 105 | 98 |
| 2024 | 114 | 102 |
Which of the following is a correct interpretation of how these index numbers are used to analyze and compare the two sectors?
They facilitate a direct comparison of the relative changes between the two variables over time, showing that real GDP grew by 14%14\%14% whereas manufacturing output grew by 2%2\%2% between 2015 and 2024.
They prove that the absolute monetary value of real GDP was greater than the absolute monetary value of manufacturing output in 2021 because its index value (105105105) was higher than that of manufacturing (989898).
They show that manufacturing output fell by exactly 6%6\%6% between 2018 and 2021.
They automatically adjust the raw manufacturing output data to filter out the distorting effects of inflation and seasonal variations over the nine-year period.
187 exam-style questions on AQA A Level Economics 2.1 The measurement of macroeconomic performance, covering 2.1.1 The objectives of government economic policy, 2.1.2 Macroeconomic indicators, 2.1.3 Uses of index numbers, and 2.1.4 Uses of national income data (A-level only). Each one has a worked solution and a mark scheme showing where the marks go.