Edexcel A-level Economics Study
Guide(exam practice) Newest 2025 With
Complete Questions And Answers(verified
by experts)
Economics - CORRECT ANSWER-The study of human behaviour under scarcity
Scarcity - CORRECT ANSWER-Describes any situation in which factors of production
are finite, whereas wants are infinite
Ceteris Paribus - CORRECT ANSWER-latin expression meaning "other things equal"
which is another way of saying that all other things are assumed to be constant or
unchanging
Consumers - CORRECT ANSWER-those who demand goods and services
Producers - CORRECT ANSWER-those who supply goods and services
Government - CORRECT ANSWER-those who tax and distribute certain goods and
services to both consumers and producers
,Demand - CORRECT ANSWER-the quantity of goods consumers are willing to buy at a
given price- an inverse relationship
Supply - CORRECT ANSWER-the quantity of goods producers are willing to sell at a
given price- a direct relationship
equilibrium price - CORRECT ANSWER-the price at which there is no tendency to
change because planned purchases (demand) are equal to planned sales (supply)
Income effect - CORRECT ANSWER-as prices fall, consumers can purchase more-
even with a fixed income
substitution effect - CORRECT ANSWER-as the price of one good rises, consumers
find substitute goods more attractive
law of diminishing marginal utility - CORRECT ANSWER-For quantity demanded to
increase, prices must fall given that marginal unites generate less utility
What causes a movement along the demand curve? - CORRECT ANSWER-it is when
there is a change in quantity demanded due to an increase or decrease in price while all
other factors remain constant
What causes a shift in the demand curve? - CORRECT ANSWER-it is caused by
changes in non-price factors (PASIFICS)
What is PASIFICS - CORRECT ANSWER-POPULATION
ADVERTISING
SUBSTITUTIONS
INCOME LEVELS
FASHION/TREND
INTEREST RATES
COMPLEMENTARY GOODS
SPECULATION
What is GDP? - CORRECT ANSWER-- Gross domestic product
- the total value of all new goods and services produced in a given year
Recession - CORRECT ANSWER-two consecutive quarters of negative GDP growth
what are the limitations of GDP- PC - CORRECT ANSWER-Per capita- population
growth leads to an increase in GDP due to greater spending/earning/output. However,
individuals may be ported if the rate of population growth is greater than the rate of
economic growth
,what are the limitations of GDP- HE - CORRECT ANSWER-Hidden economy: Unpaid
work isn't captured in official figures, such as: caring responsibilities; subsistence
farming; black markets; hobbies
what are the limitations of GDP- I - CORRECT ANSWER-Inequality- Rising GDP could
result from the richest getting richer, rather than everyone, or even the average
becoming better off
what are the limitations of GDP- ED - CORRECT ANSWER-Environmental degradation-
Critics have argued that GDP fails to consider whether economic activity is sustainable,
or the damage it might do to the natural world
what are the limitations of GDP- C - CORRECT ANSWER-Comparisons- Different
estimation techniques and purchasing power make it difficult to make
international/historical comparisons
what are the limitations of GDP- H - CORRECT ANSWER-Happiness- In 2010, the
ONS started measuring well-being alongside economic growth. This measures health,
relationships, education and skills, as well as personal finances and the environment
Easterlin Paradox - CORRECT ANSWER-Increases in a country's per capita income
does not necessarily lead to an increase in happiness.There is little direct relationship
within countries. Other factors are more important determinants such as social
connections.
working age population - CORRECT ANSWER-all those between the ages of 16-64
years.
Labour force - CORRECT ANSWER-all those able and willing to work
employment - CORRECT ANSWER-the proportion of the working-age population that is
working
unemployment - CORRECT ANSWER-the proportion of the working-age population that
is actively seeking work but not working
underemployment - CORRECT ANSWER-employed but seeking more hours
- not doing work that makes use of their full skills and abilities
Ways to measure unemployment - CORRECT ANSWER-Claimant count and
international labour organisation
Claimaint Count - CORRECT ANSWER-Records the number of people claiming
unemployment-related benefits
, Positives and negatives of claimant count - CORRECT ANSWER-Positive: Easy and
cheap to collect
Negatives: May be susceptible to political manipulation
-Exclude people who are out of work, actively seeking work but don't claim
-Fraud could lead to overestimating population
International Labour Organisation - CORRECT ANSWER-Surveys and estimated the
number of people who are without a job + actively seeking work + available to start work
in the next two weeks
Positives and negatives of the international labour organisation - CORRECT ANSWER-
Positives: More accurate
- Based on international standards
Negatives: More costly to
compile
-Only need to work for 1 hour a week to be counted as employed
Inflation - CORRECT ANSWER-An increase in the general price level
Index - CORRECT ANSWER-A statistical measure of relative change
Real - CORRECT ANSWER-When a figure has been adjusted for inflation
nominal - CORRECT ANSWER-when a figure has not been adjusted for inflation
Disinflation - CORRECT ANSWER-A fall in the rate of inflation- prices are increasing
but at a slower rate
Deflation - CORRECT ANSWER-A decrease in the general price level
Hyperinflation - CORRECT ANSWER-A rapid, significant and uncontrollable increase in
the general price level
Problems with inflation - CORRECT ANSWER-- Erodes the value of money, savings
and wages
- Uncertainty leads to lower consumer and business confidence
- Worsens inequality- worse for those who spend a high proportion of their income on
necessities
Problems with deflation - CORRECT ANSWER-- A sign of an economic slowdown
-Discourages consumer spending: downwards spiral
- Debt value increase in real terms; borrowers worse off
The profit incentive - CORRECT ANSWER-as prices increase, firms have a larger
incentive to produce more/enter the market
Guide(exam practice) Newest 2025 With
Complete Questions And Answers(verified
by experts)
Economics - CORRECT ANSWER-The study of human behaviour under scarcity
Scarcity - CORRECT ANSWER-Describes any situation in which factors of production
are finite, whereas wants are infinite
Ceteris Paribus - CORRECT ANSWER-latin expression meaning "other things equal"
which is another way of saying that all other things are assumed to be constant or
unchanging
Consumers - CORRECT ANSWER-those who demand goods and services
Producers - CORRECT ANSWER-those who supply goods and services
Government - CORRECT ANSWER-those who tax and distribute certain goods and
services to both consumers and producers
,Demand - CORRECT ANSWER-the quantity of goods consumers are willing to buy at a
given price- an inverse relationship
Supply - CORRECT ANSWER-the quantity of goods producers are willing to sell at a
given price- a direct relationship
equilibrium price - CORRECT ANSWER-the price at which there is no tendency to
change because planned purchases (demand) are equal to planned sales (supply)
Income effect - CORRECT ANSWER-as prices fall, consumers can purchase more-
even with a fixed income
substitution effect - CORRECT ANSWER-as the price of one good rises, consumers
find substitute goods more attractive
law of diminishing marginal utility - CORRECT ANSWER-For quantity demanded to
increase, prices must fall given that marginal unites generate less utility
What causes a movement along the demand curve? - CORRECT ANSWER-it is when
there is a change in quantity demanded due to an increase or decrease in price while all
other factors remain constant
What causes a shift in the demand curve? - CORRECT ANSWER-it is caused by
changes in non-price factors (PASIFICS)
What is PASIFICS - CORRECT ANSWER-POPULATION
ADVERTISING
SUBSTITUTIONS
INCOME LEVELS
FASHION/TREND
INTEREST RATES
COMPLEMENTARY GOODS
SPECULATION
What is GDP? - CORRECT ANSWER-- Gross domestic product
- the total value of all new goods and services produced in a given year
Recession - CORRECT ANSWER-two consecutive quarters of negative GDP growth
what are the limitations of GDP- PC - CORRECT ANSWER-Per capita- population
growth leads to an increase in GDP due to greater spending/earning/output. However,
individuals may be ported if the rate of population growth is greater than the rate of
economic growth
,what are the limitations of GDP- HE - CORRECT ANSWER-Hidden economy: Unpaid
work isn't captured in official figures, such as: caring responsibilities; subsistence
farming; black markets; hobbies
what are the limitations of GDP- I - CORRECT ANSWER-Inequality- Rising GDP could
result from the richest getting richer, rather than everyone, or even the average
becoming better off
what are the limitations of GDP- ED - CORRECT ANSWER-Environmental degradation-
Critics have argued that GDP fails to consider whether economic activity is sustainable,
or the damage it might do to the natural world
what are the limitations of GDP- C - CORRECT ANSWER-Comparisons- Different
estimation techniques and purchasing power make it difficult to make
international/historical comparisons
what are the limitations of GDP- H - CORRECT ANSWER-Happiness- In 2010, the
ONS started measuring well-being alongside economic growth. This measures health,
relationships, education and skills, as well as personal finances and the environment
Easterlin Paradox - CORRECT ANSWER-Increases in a country's per capita income
does not necessarily lead to an increase in happiness.There is little direct relationship
within countries. Other factors are more important determinants such as social
connections.
working age population - CORRECT ANSWER-all those between the ages of 16-64
years.
Labour force - CORRECT ANSWER-all those able and willing to work
employment - CORRECT ANSWER-the proportion of the working-age population that is
working
unemployment - CORRECT ANSWER-the proportion of the working-age population that
is actively seeking work but not working
underemployment - CORRECT ANSWER-employed but seeking more hours
- not doing work that makes use of their full skills and abilities
Ways to measure unemployment - CORRECT ANSWER-Claimant count and
international labour organisation
Claimaint Count - CORRECT ANSWER-Records the number of people claiming
unemployment-related benefits
, Positives and negatives of claimant count - CORRECT ANSWER-Positive: Easy and
cheap to collect
Negatives: May be susceptible to political manipulation
-Exclude people who are out of work, actively seeking work but don't claim
-Fraud could lead to overestimating population
International Labour Organisation - CORRECT ANSWER-Surveys and estimated the
number of people who are without a job + actively seeking work + available to start work
in the next two weeks
Positives and negatives of the international labour organisation - CORRECT ANSWER-
Positives: More accurate
- Based on international standards
Negatives: More costly to
compile
-Only need to work for 1 hour a week to be counted as employed
Inflation - CORRECT ANSWER-An increase in the general price level
Index - CORRECT ANSWER-A statistical measure of relative change
Real - CORRECT ANSWER-When a figure has been adjusted for inflation
nominal - CORRECT ANSWER-when a figure has not been adjusted for inflation
Disinflation - CORRECT ANSWER-A fall in the rate of inflation- prices are increasing
but at a slower rate
Deflation - CORRECT ANSWER-A decrease in the general price level
Hyperinflation - CORRECT ANSWER-A rapid, significant and uncontrollable increase in
the general price level
Problems with inflation - CORRECT ANSWER-- Erodes the value of money, savings
and wages
- Uncertainty leads to lower consumer and business confidence
- Worsens inequality- worse for those who spend a high proportion of their income on
necessities
Problems with deflation - CORRECT ANSWER-- A sign of an economic slowdown
-Discourages consumer spending: downwards spiral
- Debt value increase in real terms; borrowers worse off
The profit incentive - CORRECT ANSWER-as prices increase, firms have a larger
incentive to produce more/enter the market
