AQA ECONOMICS FINAL PAPER 2025/2026 QUESTIONS
AND SOLUTIONS MARKED A+
✔✔Liquidity - ✔✔measures the ease with which assets can be turned into cash quickly
without a loss in value. Cash is the mist liquid of all assets
✔✔Money supply - ✔✔the stock of money in the economy, made up of cash and bank
deposits
✔✔Exchange rate - ✔✔the price of a currency
✔✔Public sector borrowing - ✔✔borrowing by the government and other parts of the
public sector to finance a budget deficit
✔✔National debt - ✔✔the stock of all past central government borrowing that has not
been paid back
✔✔Progressive taxation - ✔✔a tax is progressive if, as income rises, a larger proportion
of income is paid in tax
✔✔Regressive taxation - ✔✔when the proportion of income paid in tax falls as income
increases
✔✔Proportional taxation - ✔✔when the proportion of income paid in tax stays the same
as income increases
✔✔Tax threshold - ✔✔the basic tax threshold is the level of income above which people
pay income tax. Income below the basic tax threshold is untaxed
✔✔Direct tax - ✔✔a tax which cannot be shifted by the person legally liable to pay the
tax onto someone else. Direct taxes are levied on income and wealth
✔✔Indirect tax - ✔✔a tax which can be shifted by the person legally liable to pay the tax
onto someone else, for example VAT. Indirect taxes are levied on spending
✔✔Supply-side policies - ✔✔aim to improve national economic performance by creating
competitive and more efficient markets and through interventionist policies such as
government finance of labour retraining schemes
✔✔Supply-side economics - ✔✔a branch of free-market economics arguing that
government policy should be used to improve the competitiveness and efficiency of
markets and, through this, the performance of the economy
, ✔✔Privatisation - ✔✔involves shifting ownership of state-owned assets to the private
sector
✔✔Marketisation - ✔✔involves shifting provision of goods or services from the non-
market sector to the market sector
✔✔Deregulation - ✔✔involves removing imposed regulations
✔✔Supply-side improvement - ✔✔reforms undertaken by the private sector to reduce
costs to enable firms to become more productively efficient and competitive
✔✔what is borrowing - ✔✔spend more money than they earn, through loans or credit
cards etc.
✔✔equation for aggregate demand - ✔✔AD = C + I + G + (X-M)
✔✔ Macroeconomics - ✔✔involves the study of the whole economy at the aggregate
level
✔✔Policy Objective - ✔✔a target or goal that policy-makers aim to 'hit'
✔✔GDP - ✔✔the total value of goods and services produce in a country in a year
✔✔Real GDP - ✔✔a measure of all the goods and services produced in an economy,
adjusted for price changes or inflation
✔✔Nominal GDP - ✔✔GDP measured at the current market prices, without removing
the effects of inflation
✔✔Recession - ✔✔a period of economic decline, when the country's GDP falls for two
or more consecutive quarters
✔✔Full Employment - ✔✔when demand and supply for labour in an economy are in
equilibrium (at the price of market wages)
✔✔Claimant Count - ✔✔the method of measuring unemployment according to those
people who are claiming unemployment related benefits (Jobseeker's allowance)
✔✔Labour Force Survey - ✔✔a quarterly sample survey of households in the UK. Its
purpose is to provide information on the UK labour market.
✔✔Inflation - ✔✔a general increase in the price level, over a time period, or a general
decrease in the value of money
AND SOLUTIONS MARKED A+
✔✔Liquidity - ✔✔measures the ease with which assets can be turned into cash quickly
without a loss in value. Cash is the mist liquid of all assets
✔✔Money supply - ✔✔the stock of money in the economy, made up of cash and bank
deposits
✔✔Exchange rate - ✔✔the price of a currency
✔✔Public sector borrowing - ✔✔borrowing by the government and other parts of the
public sector to finance a budget deficit
✔✔National debt - ✔✔the stock of all past central government borrowing that has not
been paid back
✔✔Progressive taxation - ✔✔a tax is progressive if, as income rises, a larger proportion
of income is paid in tax
✔✔Regressive taxation - ✔✔when the proportion of income paid in tax falls as income
increases
✔✔Proportional taxation - ✔✔when the proportion of income paid in tax stays the same
as income increases
✔✔Tax threshold - ✔✔the basic tax threshold is the level of income above which people
pay income tax. Income below the basic tax threshold is untaxed
✔✔Direct tax - ✔✔a tax which cannot be shifted by the person legally liable to pay the
tax onto someone else. Direct taxes are levied on income and wealth
✔✔Indirect tax - ✔✔a tax which can be shifted by the person legally liable to pay the tax
onto someone else, for example VAT. Indirect taxes are levied on spending
✔✔Supply-side policies - ✔✔aim to improve national economic performance by creating
competitive and more efficient markets and through interventionist policies such as
government finance of labour retraining schemes
✔✔Supply-side economics - ✔✔a branch of free-market economics arguing that
government policy should be used to improve the competitiveness and efficiency of
markets and, through this, the performance of the economy
, ✔✔Privatisation - ✔✔involves shifting ownership of state-owned assets to the private
sector
✔✔Marketisation - ✔✔involves shifting provision of goods or services from the non-
market sector to the market sector
✔✔Deregulation - ✔✔involves removing imposed regulations
✔✔Supply-side improvement - ✔✔reforms undertaken by the private sector to reduce
costs to enable firms to become more productively efficient and competitive
✔✔what is borrowing - ✔✔spend more money than they earn, through loans or credit
cards etc.
✔✔equation for aggregate demand - ✔✔AD = C + I + G + (X-M)
✔✔ Macroeconomics - ✔✔involves the study of the whole economy at the aggregate
level
✔✔Policy Objective - ✔✔a target or goal that policy-makers aim to 'hit'
✔✔GDP - ✔✔the total value of goods and services produce in a country in a year
✔✔Real GDP - ✔✔a measure of all the goods and services produced in an economy,
adjusted for price changes or inflation
✔✔Nominal GDP - ✔✔GDP measured at the current market prices, without removing
the effects of inflation
✔✔Recession - ✔✔a period of economic decline, when the country's GDP falls for two
or more consecutive quarters
✔✔Full Employment - ✔✔when demand and supply for labour in an economy are in
equilibrium (at the price of market wages)
✔✔Claimant Count - ✔✔the method of measuring unemployment according to those
people who are claiming unemployment related benefits (Jobseeker's allowance)
✔✔Labour Force Survey - ✔✔a quarterly sample survey of households in the UK. Its
purpose is to provide information on the UK labour market.
✔✔Inflation - ✔✔a general increase in the price level, over a time period, or a general
decrease in the value of money
