PEARSON EDEXCEL LEVEL 3 ADVANCED GCE IN ECONOMICS B – 500 QUESTIONS
TEST BANK | A+ GRADED, MOST TESTED TOPICS
What are the characteristics of developed, emerging, and developing economies? -
ANSWER****Developed economies are mature with high incomes; emerging economies are
growing rapidly; developing economies are less advanced with lower incomes.
What is the significance of mean and median incomes in economic analysis? -
ANSWER****They provide insights into income distribution and economic inequality within a
population.
What is the relationship between specialisation and international trade? -
ANSWER****Specialisation allows countries to produce goods more efficiently, leading to
increased international trade.
What are trading blocs? - ANSWER****Groups of countries that have agreed to reduce or
eliminate trade barriers among themselves.
What are the two types of trade: visibles and invisibles? - ANSWER****Visibles refer to
tangible goods that are imported and exported, while invisibles refer to services.
How do cheap imports impact standards of living? - ANSWER****They can lower prices for
consumers, potentially improving living standards, but may also harm domestic industries.
What are the implications of changes in exchange rates for firms? - ANSWER****Changes in
exchange rates can affect the cost of imports and exports, impacting profitability and
competitiveness.
What is the economic cycle? - ANSWER****The economic cycle refers to the fluctuations in
economic activity over time, including periods of growth and recession.
,What are the characteristics of a boom in the economic cycle? - ANSWER****High levels of
economic activity, low unemployment, and rising consumer confidence.
What are the characteristics of a recession? - ANSWER****Declining economic activity, rising
unemployment, and reduced consumer spending.
What is the circular flow of income? - ANSWER****A model that illustrates how money moves
through an economy between households and firms.
What factors influence aggregate demand (AD)? - ANSWER****Components of AD include
consumption (C), investment (I), government spending (G), and net exports (X-M).
What factors influence aggregate supply (AS)? - ANSWER****Changes in the cost of inputs
and resources, and changes in productivity.
What is inflation? - ANSWER****A general increase in prices and fall in the purchasing value
of money.
What are the two main types of inflation? - ANSWER****Demand-pull inflation, which occurs
when demand exceeds supply, and cost-push inflation, which occurs when production costs rise.
What is the impact of inflation on firms? - ANSWER****It can create uncertainty and lead to a
loss of international competitiveness.
What is the impact of inflation on individuals? - ANSWER****It can result in a loss of real
income and affect savers and borrowers.
,What are the measures of unemployment? - ANSWER****The claimant count and the
International Labour Organisation (ILO) measure.
What are the causes of unemployment? - ANSWER****Structural unemployment,
occupational immobility, geographical immobility, technological unemployment, and demand
deficiency/cyclical unemployment.
What is the impact of unemployment on firms and individuals? - ANSWER****Unemployment
can lead to reduced consumer spending and lower demand for goods and services, impacting
firms' revenues and individuals' livelihoods.
What is the focus of macroeconomic policy? - ANSWER****Stabilisation of the economy and
improvement of standards of living, often influenced by controversy and debate.
What are the possible macroeconomic objectives? - ANSWER****Economic growth, low
unemployment, low and stable rate of inflation, balance of payments equilibrium on current
account.
What is fiscal policy? - ANSWER****Adjusting levels of government spending and taxation to
affect aggregate demand.
What is monetary policy? - ANSWER****Adjusting interest rates to affect aggregate demand.
What are supply-side policies? - ANSWER****Policies that include taxes, benefits, education
and training, grants and subsidies, and infrastructure.
What is exchange rate policy? - ANSWER****A policy that can involve a floating exchange
rate.
, What are potential policy conflicts and trade-offs in macroeconomics? - ANSWER****Conflicts
may arise between inflation and unemployment, and between economic growth and negative
externalities.
What issues do governments face in managing the macro-economy? -
ANSWER****Governments must balance multiple macroeconomic objectives and address
potential conflicts between them.
How do different macroeconomic perspectives influence policy decisions? -
ANSWER****Different schools of thought may prioritize various economic objectives and
policy tools.
What are the likely effects of individual policy instruments on specific problems? -
ANSWER****Each policy instrument can have intended effects as well as possible unintended
consequences.
What does globalization mean in economics? - ANSWER****Globalization refers to economic
developments that enhance the ability of nations and firms to trade within a rules-based
system.
What should students understand about the UK economy in the last 10 years? -
ANSWER****Students should have knowledge of current economic events and policies
affecting the UK economy.
What is the significance of multinational corporations in the global economy? -
ANSWER****They play a key role in global trade, expansion into new markets, and influence
on global labor markets.
TEST BANK | A+ GRADED, MOST TESTED TOPICS
What are the characteristics of developed, emerging, and developing economies? -
ANSWER****Developed economies are mature with high incomes; emerging economies are
growing rapidly; developing economies are less advanced with lower incomes.
What is the significance of mean and median incomes in economic analysis? -
ANSWER****They provide insights into income distribution and economic inequality within a
population.
What is the relationship between specialisation and international trade? -
ANSWER****Specialisation allows countries to produce goods more efficiently, leading to
increased international trade.
What are trading blocs? - ANSWER****Groups of countries that have agreed to reduce or
eliminate trade barriers among themselves.
What are the two types of trade: visibles and invisibles? - ANSWER****Visibles refer to
tangible goods that are imported and exported, while invisibles refer to services.
How do cheap imports impact standards of living? - ANSWER****They can lower prices for
consumers, potentially improving living standards, but may also harm domestic industries.
What are the implications of changes in exchange rates for firms? - ANSWER****Changes in
exchange rates can affect the cost of imports and exports, impacting profitability and
competitiveness.
What is the economic cycle? - ANSWER****The economic cycle refers to the fluctuations in
economic activity over time, including periods of growth and recession.
,What are the characteristics of a boom in the economic cycle? - ANSWER****High levels of
economic activity, low unemployment, and rising consumer confidence.
What are the characteristics of a recession? - ANSWER****Declining economic activity, rising
unemployment, and reduced consumer spending.
What is the circular flow of income? - ANSWER****A model that illustrates how money moves
through an economy between households and firms.
What factors influence aggregate demand (AD)? - ANSWER****Components of AD include
consumption (C), investment (I), government spending (G), and net exports (X-M).
What factors influence aggregate supply (AS)? - ANSWER****Changes in the cost of inputs
and resources, and changes in productivity.
What is inflation? - ANSWER****A general increase in prices and fall in the purchasing value
of money.
What are the two main types of inflation? - ANSWER****Demand-pull inflation, which occurs
when demand exceeds supply, and cost-push inflation, which occurs when production costs rise.
What is the impact of inflation on firms? - ANSWER****It can create uncertainty and lead to a
loss of international competitiveness.
What is the impact of inflation on individuals? - ANSWER****It can result in a loss of real
income and affect savers and borrowers.
,What are the measures of unemployment? - ANSWER****The claimant count and the
International Labour Organisation (ILO) measure.
What are the causes of unemployment? - ANSWER****Structural unemployment,
occupational immobility, geographical immobility, technological unemployment, and demand
deficiency/cyclical unemployment.
What is the impact of unemployment on firms and individuals? - ANSWER****Unemployment
can lead to reduced consumer spending and lower demand for goods and services, impacting
firms' revenues and individuals' livelihoods.
What is the focus of macroeconomic policy? - ANSWER****Stabilisation of the economy and
improvement of standards of living, often influenced by controversy and debate.
What are the possible macroeconomic objectives? - ANSWER****Economic growth, low
unemployment, low and stable rate of inflation, balance of payments equilibrium on current
account.
What is fiscal policy? - ANSWER****Adjusting levels of government spending and taxation to
affect aggregate demand.
What is monetary policy? - ANSWER****Adjusting interest rates to affect aggregate demand.
What are supply-side policies? - ANSWER****Policies that include taxes, benefits, education
and training, grants and subsidies, and infrastructure.
What is exchange rate policy? - ANSWER****A policy that can involve a floating exchange
rate.
, What are potential policy conflicts and trade-offs in macroeconomics? - ANSWER****Conflicts
may arise between inflation and unemployment, and between economic growth and negative
externalities.
What issues do governments face in managing the macro-economy? -
ANSWER****Governments must balance multiple macroeconomic objectives and address
potential conflicts between them.
How do different macroeconomic perspectives influence policy decisions? -
ANSWER****Different schools of thought may prioritize various economic objectives and
policy tools.
What are the likely effects of individual policy instruments on specific problems? -
ANSWER****Each policy instrument can have intended effects as well as possible unintended
consequences.
What does globalization mean in economics? - ANSWER****Globalization refers to economic
developments that enhance the ability of nations and firms to trade within a rules-based
system.
What should students understand about the UK economy in the last 10 years? -
ANSWER****Students should have knowledge of current economic events and policies
affecting the UK economy.
What is the significance of multinational corporations in the global economy? -
ANSWER****They play a key role in global trade, expansion into new markets, and influence
on global labor markets.
