Edexcel A-level Economics Theme 2 Questions & Correct Answers/ Graded A+

Macroeconomics : The study of the economy as a whole, including inflation, growth and unemployment. Aggregate demand : The total amount of goods / services demanded in an economy at a given time at a given price level. Aggregate supply : Total amount of goods and services supplied in the economy at a given time at given price level. What is GDP? : Gross Domestic Product = the total value of all goods and services produced in an economy in a given time period. What does % change in GDP show? : The rate of economic growth in an economy 2 Difference between real GDP and nominal GDP? : Real = adjusted for inflation. Nominal = A monetary amount not adjusted for inflation Difference between total GDP and GDP per capita? : Total GDP = Total GDP in an economy. GDP per capita = Total GDP/Total Population What is Gross National Income (GNI)? : The total amount of money earned by a country's people and businesses plus net overseas interest payments and dividends. Who has the 3 biggest GDPs in the world? : 1st = USA, 2nd = China, 3rd = Japan Disadvantages of using GDP to compare economic growth? (4) : 1. Inaccurate data (black markets/ tax avoiding sectors) 2. Doesn't show inequality in income distribution (Gini coefficient could help) 3. Doesn't compare quality of goods/services 4. Difficult to compare countries due to exchange rates 3 Benefits of economic growth on consumers (3)? : 1. Higher disposable income 2. Standards of living increase 3. Price of goods may fall and quality increase