Economic Growth worksheet

1. Calculating economic growth rate.

Go back to the research you did in week 24, Lesson: Your Nation’s GDP. Conduct a more
detailed research of the value of real GDP of the country you were assigned in week 24. Fill in
the table below and calculate the growth rate according to the formula in the IB Course
Companion:

Year Real GDP (£m) Calculate here: Growth rate (%)

2004 353,871 n/a

2005 365,318 3.23%

2006 375,382 2.75%

2007 388,247 3.43%

2008 385,260 -0.77%

2009 365,340 -5.17053%

2010 371,404 1.66%

2011 375,554 1.12%

2012 376,194 0.17%

2013 380,152 1.05%

Sources for data used

https://www.theguardian.com/news/datablog/2009/nov/25/gdp-uk-1948-gro
wth-economy​ (note: there was no data for 2014)

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http://www.worldbank.org/
 http://www.nationmaster.com/
https://www.cia.gov/library/publications/the-world-factbook/
http://hdr.undp.org/en/reports/global/hdr2009/

2. Use an Excel sheet and construct a bar graph of the real GDP of your assigned country
for the period 2004-2014. Explain how the economy grew during that period.

Real GDP begins to increase until 2007, where there is a bust in 2009, but eventually GDP
picks up again in the years after.

3. Is there an evidence of the cyclical nature of economic growth? Explain.

Yes, this perfectly represents the “boom-bust” cyclical nature of economic growth as during the
years measured, both a boom and a bust occured - the boom being in the subprime housing
market, and the bust being the 2008 global financial meltdown. One can see the business cycle
being represented in the GDP figures; starting off with recovery and a boom in 2008, a
recession in 2008-2009 and a trough, resulting in recovery after government intervention (for
instance: the US government financial bailouts, which the UK also provided to its firms to a
lesser extent, and a decrease in government spending).

4. Find information for inflation, unemployment and balance of payment for the same
period for your assigned country and fill in the table below. Use the numbers to create a
graph ( in Excel) for each of the indicators below:

Year Inflation rate (CPI) (%) Unemployment rate (%)

2000 3% 5.4%

2001 1.8% 5.08%

2002 1.7% 5.18%

2003 2.9% 4.98%

2004 3% 4.75%

2005 2.8% 4.88%

2006 3.2% 5.44%

2007 4.3% 5.31%

2008 4% 5.83%

2009 -0.5% 7.71%

For balance of payments, I could not find any data in the UK from 2000-2009, so instead I used
data from 2008 to 2018, which can be ​found​ below.

Year Balance of payment (trade balance of goods from 2008 to 2018, billion USD)

2008 -185.61

2009 -164.19

2010 -175.14

2011 -170.33

2012 -222.43
 2013 -119.42

2014 -185.2

2015 -166.59

2016 -227.6

2017 -202.41

2018 -187.12

5. Copy and paste your graphs for: economics growth, inflation, unemployment and
balance of payment on one page next to each other. Explain how the different growth rate
relates to the other macroeconomic indicators.

Inflation rates can come in tandem with economic growth, although this depends on whether the
economic growth is non-inflationary or not. One thing that must be noted, though, is that it can
eradicate the gains of economic growth. Unemployment generally slows down economic growth
as it decreases consumption, which is a component of GDP and aggregate demand, and in the
case of slowing economic growth companies will usually lay off workers, causing higher
unemployment, to cut costs. Finally, net exports are also a component of GDP, so this can
obviously affect growth rates as well.
6. Find a news article about your assigned country that relates to the costs of economic
growth and the government policies to reduce those costs. Paste the URL of the article,
discuss the effectiveness of the government policies to reduce those costs.

Legal case launched over UK’s ‘outdated’ energy policies,​ ​The Guardian, 18/5/20

The negative externalities of production, i.e. environmental issues, increase with economic
growth as production increases and are therefore a cost of economic growth. Climate change, in
fact, is one of the most pressing issues facing the planet currently, an issue accelerated by
economic growth.

The UK has so far been one of the most proactive countries in response to climate change (not
that the bar was set that high), setting in place a 2050 target for net zero CO​2​ emissions,
becoming a signatory to the Paris Agreement, and planning a gradual phase out of coal usage
over the coming decades.

But climate campaigners have pointed out there are still loopholes which means that the
government’s anti-climate change policies, in sum, are not as forthright as they seem, meaning
the government’s attempts to address the costs of economic growth are less effective.

Says Jolyon Maugham, a director at the Good Law Project, “We are teetering on the brink of a
climate catastrophe. Yet the government is refusing to even commit to a review of an outdated
energy policy that permits fossil fuel projects to be forced through. Our legal challenge seeks to
change that.” He, and other climate campaigners, are issuing a legal challenge to dispute a
2011 policy called NPS, which means that the government will prioritise avoiding energy
blackouts over avoiding the usage of fossil fuels, which cause pollution and thus environmental
damage. But the law has been used to support a number of controversial fossil fuel projects,
including a new gas plant in Yorkshire. ​The Guardian​ says it could be taken advantage of by the
government to support major fossil fuel power plants, open cast mines or fracking,
notwithstanding any energy supply concerns.