Micro Economics Edexcel A level Latest Questions and Answers 2024 (Verified by Expert)
Economic Growth-(ANSWERS)How fast a country's output (goods and services) is growing.
--> This is measured as a percentage change in real GDP each year.
GDP (Gross Domestic Product)-(ANSWERS)Total value of everything a country produces in a
year.
--> We can use GDP to compare how different countries are doing.
Total GDP-(ANSWERS)Overall size of a countries economy.
GDP Per Capita-(ANSWERS)Splits total GDP by population of country.
Why is GDP Per Capita important?-(ANSWERS)If GDP grows faster than population, there is
more to go around - more jobs, goods and services.
Nominal GDP-(ANSWERS)Includes inflation so can make economy look bigger then it actually
is.
Real GDP-(ANSWERS)Takes out inflation so shows the true size of the economy.
Volume-(ANSWERS)Physical amounts of goods and services.
Value-(ANSWERS)How much goods and services cost.
GNI (Gross National Income)-(ANSWERS)Value of everything a country produces plus the
money it earns from overseas (investments or businesses abroad) and minus the money
foreigners earn in the country and send back home.
GNP (Gross National Product)-(ANSWERS)GNP focuses on what citizens of a country produce,
whether they're working or owning businesses at home or abroad.
Difference between GNP and GDP-(ANSWERS)GNP - what citizens produce globally
GDP - what's produced inside the country
Problems with GDP to measure living standards-(ANSWERS)1) Inaccuracy of data.
2) Inequalities - increase in GDP doesn't mean everyone living better.
3) Quality of goods and services - GDP doesn't capture improvement of quality.
4) Comparing with currency rates.
5)Spending differences - military spending doesn't improve quality of life.
6)Other factors - GDP ignores elements like education and healthcare.
Easterlin Paradox-(ANSWERS)For low incomes, more money means more happiness as basic
needs met. HOWEVER for high incomes happiness slows growing as wealthier individuals have
already met their needs.
, Micro Economics Edexcel A level Latest Questions and Answers 2024 (Verified by Expert)
Purchasing Power Parities (PPP)-(ANSWERS)PPP is an exchange rate between 2 currencies,
comparing the cost of a typical basket of goods in one country to the same basket in another.
e.g. Compare price of big mac in countries around the world.
Why is PPP Important-(ANSWERS)1) GDP comparisons - alternative to regular exchange rates.
2) Cost of living adjustments - show how much people spend to maintain their standard of
living.
3) Reducing gaps - narrows gap of GDP between rich and poor countries.
Causes of Economic Growth-(ANSWERS)- Tax cuts
- Government spending
- Labor productivity
- Technological advancements
Fiscal Balance Equation-(ANSWERS)tax revenue - government spending
Inflation-(ANSWERS)- Increase in general price level
- Decrease in purchasing power of money.
Deflation-(ANSWERS)Decrease in general price level
Disinflation-(ANSWERS)Fall in inflation rate
Cost Push Inflation-(ANSWERS)Caused by an increase in firms costs which then get passed
onto consumers in form of higher prices.
Short run aggravate supply (SRAS) shifts left
Cost Push Inflation Graph-(ANSWERS)
Demand Pull Inflation-(ANSWERS)Caused by an increase in the demand for goods and
services.
Aggregate demand (AD) shift right
Demand Pull Inflation Graph-(ANSWERS)
RPI (Retail Price Index)-(ANSWERS)Measure of inflation that includes housing costs, such as
payments on mortgage interest and council tax.
CPI (Consumer Price Index)-(ANSWERS)Measure of inflation that tracks changes in price of
basket of goods and services purchased by households over time.
Economic Growth-(ANSWERS)How fast a country's output (goods and services) is growing.
--> This is measured as a percentage change in real GDP each year.
GDP (Gross Domestic Product)-(ANSWERS)Total value of everything a country produces in a
year.
--> We can use GDP to compare how different countries are doing.
Total GDP-(ANSWERS)Overall size of a countries economy.
GDP Per Capita-(ANSWERS)Splits total GDP by population of country.
Why is GDP Per Capita important?-(ANSWERS)If GDP grows faster than population, there is
more to go around - more jobs, goods and services.
Nominal GDP-(ANSWERS)Includes inflation so can make economy look bigger then it actually
is.
Real GDP-(ANSWERS)Takes out inflation so shows the true size of the economy.
Volume-(ANSWERS)Physical amounts of goods and services.
Value-(ANSWERS)How much goods and services cost.
GNI (Gross National Income)-(ANSWERS)Value of everything a country produces plus the
money it earns from overseas (investments or businesses abroad) and minus the money
foreigners earn in the country and send back home.
GNP (Gross National Product)-(ANSWERS)GNP focuses on what citizens of a country produce,
whether they're working or owning businesses at home or abroad.
Difference between GNP and GDP-(ANSWERS)GNP - what citizens produce globally
GDP - what's produced inside the country
Problems with GDP to measure living standards-(ANSWERS)1) Inaccuracy of data.
2) Inequalities - increase in GDP doesn't mean everyone living better.
3) Quality of goods and services - GDP doesn't capture improvement of quality.
4) Comparing with currency rates.
5)Spending differences - military spending doesn't improve quality of life.
6)Other factors - GDP ignores elements like education and healthcare.
Easterlin Paradox-(ANSWERS)For low incomes, more money means more happiness as basic
needs met. HOWEVER for high incomes happiness slows growing as wealthier individuals have
already met their needs.
, Micro Economics Edexcel A level Latest Questions and Answers 2024 (Verified by Expert)
Purchasing Power Parities (PPP)-(ANSWERS)PPP is an exchange rate between 2 currencies,
comparing the cost of a typical basket of goods in one country to the same basket in another.
e.g. Compare price of big mac in countries around the world.
Why is PPP Important-(ANSWERS)1) GDP comparisons - alternative to regular exchange rates.
2) Cost of living adjustments - show how much people spend to maintain their standard of
living.
3) Reducing gaps - narrows gap of GDP between rich and poor countries.
Causes of Economic Growth-(ANSWERS)- Tax cuts
- Government spending
- Labor productivity
- Technological advancements
Fiscal Balance Equation-(ANSWERS)tax revenue - government spending
Inflation-(ANSWERS)- Increase in general price level
- Decrease in purchasing power of money.
Deflation-(ANSWERS)Decrease in general price level
Disinflation-(ANSWERS)Fall in inflation rate
Cost Push Inflation-(ANSWERS)Caused by an increase in firms costs which then get passed
onto consumers in form of higher prices.
Short run aggravate supply (SRAS) shifts left
Cost Push Inflation Graph-(ANSWERS)
Demand Pull Inflation-(ANSWERS)Caused by an increase in the demand for goods and
services.
Aggregate demand (AD) shift right
Demand Pull Inflation Graph-(ANSWERS)
RPI (Retail Price Index)-(ANSWERS)Measure of inflation that includes housing costs, such as
payments on mortgage interest and council tax.
CPI (Consumer Price Index)-(ANSWERS)Measure of inflation that tracks changes in price of
basket of goods and services purchased by households over time.
