GCSE ECONOMICS CORE EXAM SET QUESTIONS AND
SOLUTIONS 2025/2026 GRADED A+
✔✔Takeover - ✔✔when one firm seeks to take control of another (this can be either
friendly or hostile).
✔✔Integration - ✔✔this occurs when two firms come together through either a merger
or a takeover
✔✔Internal economies of scale - ✔✔when one firm grows in size (increases output) and
so benefits from lower average costs.
✔✔External economies of scale - ✔✔when a whole industry grows in size, so a firm
within that industry benefits from lower average costs
✔✔National minimum wage - ✔✔a pay floor introduced by the government, which sets a
wage level below which producers cannot legally go
✔✔Economic Growth - ✔✔growth in output of the economy over time - a growth of real
GDP over time
✔✔Gross domestic product (GDP) - ✔✔the total value of goods and services produced
in the country in a year
✔✔GDP per capita - ✔✔GDP divided by the total population, therefore GDP per head.
✔✔Full employment - ✔✔when all those able and willing to work are in paid
employment at the current wage rate
✔✔Unemployment - ✔✔when workers who are able and willing to work are unable to
find employment (at current wage rates)
✔✔Claimant Count - ✔✔measures unemployment according to the number of people
claiming unemployment-related benefits ( such as Jobseeker's Allowance)
✔✔Labour force survey - ✔✔a survey of a sample of households, counting people as
unemployed if they are actively seeking work but do not have a job (in the week of the
survey).
✔✔Inflation - ✔✔A sustained rise in the general price level over time
✔✔Price stability - ✔✔the general level of prices is kept constant or grows at an
acceptably low rate over time.
, ✔✔Rate of inflation - ✔✔the rate at which the general price level rises over time.
✔✔Consumer Price Index - ✔✔the official measure of the rate of inflation
✔✔Monetary inflation - ✔✔inflation caused by growth in the economy's money supply.
✔✔Demand-pull inflation - ✔✔inflation caused by excess demand in an economy
✔✔Cost-push Inflation - ✔✔inflation caused by a rise in costs in the economy
✔✔Hyperinflation - ✔✔a rate of inflation so high that the value of money becomes close
to worthless.
✔✔Tax - ✔✔a compulsory payment to the government
✔✔Direct tax - ✔✔A tax on income or wealth
✔✔Indirect Tax - ✔✔a tax on spending, often defined as a tax on goods and services.
✔✔External Cost - ✔✔The negative impact of an economic transaction on a party who
is not directly involved in the transaction. For Example, manufacturing that causes air
pollution has costs for the whole population. (a negative impact is an external cost or
negative externality; a positive externality.)
✔✔Demerit Good - ✔✔A good or service whose consumption is considered unhealthy
or undesirable due to its bad effects on the consumers. It is over-consumed if left to
market forces. Examples include tobacco, alcohol, recreational drugs, gambling and
junk food.
Demerit goods give rise to negative externalities; merit goods give rise to positive
externalities.
✔✔Distribution of Income - ✔✔how incomes are shared out among the people of the
country
✔✔Redistribution of income - ✔✔a policy to reduce the inequalities of income so that
incomes are distributed more evenly
✔✔Inequalities of income - ✔✔incomes are distributed unevenly so some people have
a much higher income than others
✔✔Transfer Payments - ✔✔Benefits to citizens which are paid out of tax revenue
✔✔Regressive tax - ✔✔a tax that takes a greater proportion of income from lower
incomes, or takes a smaller percentage of a higher income
SOLUTIONS 2025/2026 GRADED A+
✔✔Takeover - ✔✔when one firm seeks to take control of another (this can be either
friendly or hostile).
✔✔Integration - ✔✔this occurs when two firms come together through either a merger
or a takeover
✔✔Internal economies of scale - ✔✔when one firm grows in size (increases output) and
so benefits from lower average costs.
✔✔External economies of scale - ✔✔when a whole industry grows in size, so a firm
within that industry benefits from lower average costs
✔✔National minimum wage - ✔✔a pay floor introduced by the government, which sets a
wage level below which producers cannot legally go
✔✔Economic Growth - ✔✔growth in output of the economy over time - a growth of real
GDP over time
✔✔Gross domestic product (GDP) - ✔✔the total value of goods and services produced
in the country in a year
✔✔GDP per capita - ✔✔GDP divided by the total population, therefore GDP per head.
✔✔Full employment - ✔✔when all those able and willing to work are in paid
employment at the current wage rate
✔✔Unemployment - ✔✔when workers who are able and willing to work are unable to
find employment (at current wage rates)
✔✔Claimant Count - ✔✔measures unemployment according to the number of people
claiming unemployment-related benefits ( such as Jobseeker's Allowance)
✔✔Labour force survey - ✔✔a survey of a sample of households, counting people as
unemployed if they are actively seeking work but do not have a job (in the week of the
survey).
✔✔Inflation - ✔✔A sustained rise in the general price level over time
✔✔Price stability - ✔✔the general level of prices is kept constant or grows at an
acceptably low rate over time.
, ✔✔Rate of inflation - ✔✔the rate at which the general price level rises over time.
✔✔Consumer Price Index - ✔✔the official measure of the rate of inflation
✔✔Monetary inflation - ✔✔inflation caused by growth in the economy's money supply.
✔✔Demand-pull inflation - ✔✔inflation caused by excess demand in an economy
✔✔Cost-push Inflation - ✔✔inflation caused by a rise in costs in the economy
✔✔Hyperinflation - ✔✔a rate of inflation so high that the value of money becomes close
to worthless.
✔✔Tax - ✔✔a compulsory payment to the government
✔✔Direct tax - ✔✔A tax on income or wealth
✔✔Indirect Tax - ✔✔a tax on spending, often defined as a tax on goods and services.
✔✔External Cost - ✔✔The negative impact of an economic transaction on a party who
is not directly involved in the transaction. For Example, manufacturing that causes air
pollution has costs for the whole population. (a negative impact is an external cost or
negative externality; a positive externality.)
✔✔Demerit Good - ✔✔A good or service whose consumption is considered unhealthy
or undesirable due to its bad effects on the consumers. It is over-consumed if left to
market forces. Examples include tobacco, alcohol, recreational drugs, gambling and
junk food.
Demerit goods give rise to negative externalities; merit goods give rise to positive
externalities.
✔✔Distribution of Income - ✔✔how incomes are shared out among the people of the
country
✔✔Redistribution of income - ✔✔a policy to reduce the inequalities of income so that
incomes are distributed more evenly
✔✔Inequalities of income - ✔✔incomes are distributed unevenly so some people have
a much higher income than others
✔✔Transfer Payments - ✔✔Benefits to citizens which are paid out of tax revenue
✔✔Regressive tax - ✔✔a tax that takes a greater proportion of income from lower
incomes, or takes a smaller percentage of a higher income
