Edexcel A-Level Economics
Edexcel A-Level Economics Study Guide
Questions and Answers
Question 1
Absolute advantage
Correct Answer
When a country's output of a product per unit of input is greater than that of any
other country.
Question 2
Absolute poverty
Correct Answer
When a person does not have the income or wealth to fulfil their basic needs.
Question 3
Aggregate Demand (AD)
Correct Answer
The total demand/spending in an economy at a given price level over a given
period of time. Made up of consumption, investment, government spending and
net external demand.
Question 4
Aggregate Supply (AS)
Correct Answer
The total amount of goods and services that can be supplied in an economy at a
given price level over a given period of time.
Page 1 of 454
, Edexcel A-Level Economics
Question 5
Aid
Correct Answer
The transfer of resources from one country to another.
Question 6
Allocative efficiency
Correct Answer
Where the price of a good is equal to the price consumers are willing to pay. This
occurs when all resources are allocated efficiently.
Question 7
Asymmetric information
Correct Answer
Where buyers have more information than sellers in a market, or vice versa.
Question 8
Automatic stabilisers
Correct Answer
Parts of fiscal policy that automatically react to changes in the economic cycle.
Question 9
Average Cost (AC)
Correct Answer
The cost of production per unit of output.
Question 10
Average Revenue (AR)
Correct Answer
The revenue per unit sold.
Page 2 of 454
, Edexcel A-Level Economics
Question 11
Backward vertical integration
Correct Answer
Where a firm merges with or takes over a firm further back in the production
process.
Question 12
Balance of payments
Correct Answer
A record of the international transactions of an economy.
Question 13
Bank rate
Correct Answer
The official rate of interest set by the central bank (e.g. by the Monetary Policy
Committee of the Bank of England)
Question 14
Barriers to entry
Correct Answer
Potential difficulties that make it hard for firms to enter a market.
Question 15
Barriers to exit
Correct Answer
Potential difficulties that make it hard for firms to leave a market.
Page 3 of 454
, Edexcel A-Level Economics
Question 16
Black market
Correct Answer
Economic activity that occurs without taxation and government intervention.
Question 17
Budget deficit
Correct Answer
When government spending exceeds tax revenues.
Question 18
Budget surplus
Correct Answer
When tax revenues exceed government spending.
Question 19
Capital account of the balance of payments
Correct Answer
A part of the balance of payments that shows transfers of non-monetary and fixed
assets into and out of the economy.
Question 20
Cartel
Correct Answer
A group of products who collude to limit output in order to keep prices high.
Page 4 of 454
Edexcel A-Level Economics Study Guide
Questions and Answers
Question 1
Absolute advantage
Correct Answer
When a country's output of a product per unit of input is greater than that of any
other country.
Question 2
Absolute poverty
Correct Answer
When a person does not have the income or wealth to fulfil their basic needs.
Question 3
Aggregate Demand (AD)
Correct Answer
The total demand/spending in an economy at a given price level over a given
period of time. Made up of consumption, investment, government spending and
net external demand.
Question 4
Aggregate Supply (AS)
Correct Answer
The total amount of goods and services that can be supplied in an economy at a
given price level over a given period of time.
Page 1 of 454
, Edexcel A-Level Economics
Question 5
Aid
Correct Answer
The transfer of resources from one country to another.
Question 6
Allocative efficiency
Correct Answer
Where the price of a good is equal to the price consumers are willing to pay. This
occurs when all resources are allocated efficiently.
Question 7
Asymmetric information
Correct Answer
Where buyers have more information than sellers in a market, or vice versa.
Question 8
Automatic stabilisers
Correct Answer
Parts of fiscal policy that automatically react to changes in the economic cycle.
Question 9
Average Cost (AC)
Correct Answer
The cost of production per unit of output.
Question 10
Average Revenue (AR)
Correct Answer
The revenue per unit sold.
Page 2 of 454
, Edexcel A-Level Economics
Question 11
Backward vertical integration
Correct Answer
Where a firm merges with or takes over a firm further back in the production
process.
Question 12
Balance of payments
Correct Answer
A record of the international transactions of an economy.
Question 13
Bank rate
Correct Answer
The official rate of interest set by the central bank (e.g. by the Monetary Policy
Committee of the Bank of England)
Question 14
Barriers to entry
Correct Answer
Potential difficulties that make it hard for firms to enter a market.
Question 15
Barriers to exit
Correct Answer
Potential difficulties that make it hard for firms to leave a market.
Page 3 of 454
, Edexcel A-Level Economics
Question 16
Black market
Correct Answer
Economic activity that occurs without taxation and government intervention.
Question 17
Budget deficit
Correct Answer
When government spending exceeds tax revenues.
Question 18
Budget surplus
Correct Answer
When tax revenues exceed government spending.
Question 19
Capital account of the balance of payments
Correct Answer
A part of the balance of payments that shows transfers of non-monetary and fixed
assets into and out of the economy.
Question 20
Cartel
Correct Answer
A group of products who collude to limit output in order to keep prices high.
Page 4 of 454
