A Level Economics (AQA) Exam Questions and Answers |Complete Solutions Graded A+
|100% Correct
Tragedy of the commons the over-use or exploitation of resources such as the oceans, the
forests or the atmosphere that are not owned by individuals or organisations.
Transmission mechanism: how a change in policy actually works its ways through the economy
to affect macroeconomic indicators
Treasury bill a very short-term form of borrowing by the government, usually repaid within
three months
Trend growth the rate of growth in LRAS over time, representing the maximum potential
capacity of the UK economy
Trickle-down a free market view that poorer members of society will benefit from high
earners and the relatively wealthy, e.g through job opportunities and helping to fund merit
goods
Unemployment rate the number of unemployed people expressed as a percentage of the
current labour force
Unemployment those of working age who are currently out of work but are actively seeking
work
Unit tax a tax where a fixed amount is placed on the item sold
Utility the amount of satisfaction or benefit that a consumer gains from consuming a good
or service
Variable costs costs of production that vary with the level of output
,Velocity of circulation the rate at which money circulates around the economy — i.e how
many times the same banknote is used over a period of time
Vertical equity where the tax paid is based on the ability to pay
Voluntary unemployment where people are unwilling to accept a job at the going wage rate
despite there being jobs available
Wage differentials differences in wages arising between individuals, occupations, industries
and regions
Wage rigidity the situation where wages are sticky and do not fall in line with falling prices
Want something which people feel improves their standard of living but is not required for
survival
Wealth effect increases in the value of a household's assets cause people to feel wealthier
and encourage them to spend more of their current income (or to borrow more to finance the
increases in spending)
Wealth (finance) a stock of valuable assets such as property or shares
Wealth wealth refers to the value of the assets held by households. Most wealth will be held
in the value of property (or equity) owned by the household
Weighted price index an average level of prices adjusted so that price changes in popular
items affect the price index more than price changes in seldombought items
Withdrawals money taken out of the circular flow of income
,X-inefficiency the lack of willingness of firms with monopoly power to control their costs of
production
Allocative efficiency when an economy's factors of production are used to produce the
combination of goods and services that maximises society's welfare
Asymmetric information a source of information failure where one economic agent knows
more than another, giving them more power in a market transaction
Anchoring the tendency of individuals to rely on particular pieces of information when
making choices between different goods and services
Availability bias when people make judgements about the probability of events by recalling
recent instances
Altruism and fairness individuals are motivated to do the right thing, even if this means
paying more for a good or service
Average total cost total costs of production divided by the number of units of output
Average revenue total revenue divided by units of output. Equal to price in a firm that sells
one product at a fixed price
Absolute poverty when some people can't afford the basic necessities to sustain life, e.g
food, shelter and warmth
Allocative function the function of prices that acts to divert resources to where returns can
be maximised
, Asymmetric information a source of information failure where one economic agent knows
more than another, giving them more power in a market transaction
Aggregate demand total planned spending in an economy over a period of time at any given
price level. It is calculated as C + I + G + X − M
Accelerator theory where increases in national income lead to firms spending more on
investment, in order to expand their capacity to exploit the rising income
Aggregate supply the total quantity of output that all the firms in the economy are willing to
produce at a given price level
Asset price bubble where a rise in an asset's price becomes self-fulfilling and the price rises
beyond the level that normal demand and supply conditions would generate. This eventually
leads to sharp falls in its price when the bubble is burst
Animal spirits the collective feeling of consumer and business confidence which can affect
economic decisions, such as those affecting consumption and investment
Adaptive expectations where workers take time to adjust their expectations of the inflation
rate to match the actual inflation rate
Ad valorem tax a tax based on a percentage of added value on top of the original price
Absolute advantage a country has an absolute advantage in the production of a product if it
can be produced for a lower cost than in another country
Aid this can refer to money, goods and services, as well as loans at favourable interest rates
given to a less developed country
|100% Correct
Tragedy of the commons the over-use or exploitation of resources such as the oceans, the
forests or the atmosphere that are not owned by individuals or organisations.
Transmission mechanism: how a change in policy actually works its ways through the economy
to affect macroeconomic indicators
Treasury bill a very short-term form of borrowing by the government, usually repaid within
three months
Trend growth the rate of growth in LRAS over time, representing the maximum potential
capacity of the UK economy
Trickle-down a free market view that poorer members of society will benefit from high
earners and the relatively wealthy, e.g through job opportunities and helping to fund merit
goods
Unemployment rate the number of unemployed people expressed as a percentage of the
current labour force
Unemployment those of working age who are currently out of work but are actively seeking
work
Unit tax a tax where a fixed amount is placed on the item sold
Utility the amount of satisfaction or benefit that a consumer gains from consuming a good
or service
Variable costs costs of production that vary with the level of output
,Velocity of circulation the rate at which money circulates around the economy — i.e how
many times the same banknote is used over a period of time
Vertical equity where the tax paid is based on the ability to pay
Voluntary unemployment where people are unwilling to accept a job at the going wage rate
despite there being jobs available
Wage differentials differences in wages arising between individuals, occupations, industries
and regions
Wage rigidity the situation where wages are sticky and do not fall in line with falling prices
Want something which people feel improves their standard of living but is not required for
survival
Wealth effect increases in the value of a household's assets cause people to feel wealthier
and encourage them to spend more of their current income (or to borrow more to finance the
increases in spending)
Wealth (finance) a stock of valuable assets such as property or shares
Wealth wealth refers to the value of the assets held by households. Most wealth will be held
in the value of property (or equity) owned by the household
Weighted price index an average level of prices adjusted so that price changes in popular
items affect the price index more than price changes in seldombought items
Withdrawals money taken out of the circular flow of income
,X-inefficiency the lack of willingness of firms with monopoly power to control their costs of
production
Allocative efficiency when an economy's factors of production are used to produce the
combination of goods and services that maximises society's welfare
Asymmetric information a source of information failure where one economic agent knows
more than another, giving them more power in a market transaction
Anchoring the tendency of individuals to rely on particular pieces of information when
making choices between different goods and services
Availability bias when people make judgements about the probability of events by recalling
recent instances
Altruism and fairness individuals are motivated to do the right thing, even if this means
paying more for a good or service
Average total cost total costs of production divided by the number of units of output
Average revenue total revenue divided by units of output. Equal to price in a firm that sells
one product at a fixed price
Absolute poverty when some people can't afford the basic necessities to sustain life, e.g
food, shelter and warmth
Allocative function the function of prices that acts to divert resources to where returns can
be maximised
, Asymmetric information a source of information failure where one economic agent knows
more than another, giving them more power in a market transaction
Aggregate demand total planned spending in an economy over a period of time at any given
price level. It is calculated as C + I + G + X − M
Accelerator theory where increases in national income lead to firms spending more on
investment, in order to expand their capacity to exploit the rising income
Aggregate supply the total quantity of output that all the firms in the economy are willing to
produce at a given price level
Asset price bubble where a rise in an asset's price becomes self-fulfilling and the price rises
beyond the level that normal demand and supply conditions would generate. This eventually
leads to sharp falls in its price when the bubble is burst
Animal spirits the collective feeling of consumer and business confidence which can affect
economic decisions, such as those affecting consumption and investment
Adaptive expectations where workers take time to adjust their expectations of the inflation
rate to match the actual inflation rate
Ad valorem tax a tax based on a percentage of added value on top of the original price
Absolute advantage a country has an absolute advantage in the production of a product if it
can be produced for a lower cost than in another country
Aid this can refer to money, goods and services, as well as loans at favourable interest rates
given to a less developed country
