Economics Edexcel A Level Paper 2 Definitions question and answers 2024

Globalisation - Correct Answer Refers to the increasing integration and interdependence of the World's national economies into a single international market. It involves the free trade of goods and services, the free movement of capital and labour and the free interchange of technology and intellectual capital Developed economy - Correct Answer An economy that that is economically developed and its population has a high GDP per capita e.g USA, Australia Developing economy - Correct Answer An economy that that is less economically developed and its population has a low GDP per capita e.g African countries Emerging economy - Correct Answer An economy that that is developing economically and its population has a rising GDP per capita and a rising middle class e.g BRIC Absolute advantage - Correct Answer A country has it in the production of a good or service if it can produce it using fewer resources and at a lower cost than another country Comparative advantage - Correct Answer Occurs when a country can produce a good or service at a lower opportunity cost than another country. This means they have to give up producing less of another good than another country, using the same resources Specialisation of trade - Correct Answer When a country has absolute advantage in producing a particular good or service, they tend to produce this at the highest output possible in order to trade it with other countries Free trade area - Correct Answer Where countries agree to trade goods with other members without protectionist barriers Customs union - Correct Answer Countries in this agreement have an established common trade policy with the rest of the world e.g they might use a common external tariff. They also have free trade between members. The EU is an example of a Customs union Common market