1 Exampromax - Stuvia US
Edexcel A-Level Economics A: Definitions
Questions and Answers 100% Correct Answers
Already Graded A+
Q: Absolute advantage
Ans: When a country's output of a product per unit of input is greater than that
of any other country.
Q: Absolute poverty
Ans: When a person does not have the income or wealth to fulfil their basic
Exampromax - Stuvia US
needs.
Q: Aggregate Demand (AD)
Ans: 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.
Q: Aggregate Supply (AS)
Ans: 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.
Q: Aid
Ans: The transfer of resources from one country to another.
Q: Allocative efficiency
Ans: Where the price of a good is equal to the price consumers are willing to
pay. This occurs when all resources are allocated efficiently.
Q: Asymmetric information
Ans: Where buyers have more information than sellers in a market, or vice
versa.
, 2 Exampromax - Stuvia US
Q: Automatic stabilisers
Ans: Parts of fiscal policy that automatically react to changes in the economic
cycle.
Q: Average Cost (AC)
Ans: The cost of production per unit of output.
Q: Average Revenue (AR)
Ans: The revenue per unit sold.
Q: Backward vertical integration
Ans: Where a firm merges with or takes over a firm further back in the
production process.
Exampromax - Stuvia US
Q: Balance of payments
Ans: A record of the international transactions of an economy.
Q: Bank rate
Ans: The official rate of interest set by the central bank (e.g. by the Monetary
Policy Committee of the Bank of England)
Q: Barriers to entry
Ans: Potential difficulties that make it hard for firms to enter a market.
Q: Barriers to exit
Ans: Potential difficulties that make it hard for firms to leave a market.
Q: Black market
Ans: Economic activity that occurs without taxation and government
intervention.
Q: Budget deficit
, 3 Exampromax - Stuvia US
Ans: When government spending exceeds tax revenues.
Q: Budget surplus
Ans: When tax revenues exceed government spending.
Q: Capital account of the balance of payments
Ans: A part of the balance of payments that shows transfers of non-monetary
and fixed assets into and out of the economy.
Q: Cartel
Ans: A group of products who collude to limit output in order to keep prices
high.
Exampromax - Stuvia US
Q: Central bank
Ans: The institution responsible for issuing banknotes in an economy, acting as
a lender of last resort, and implementing monetary policy.
Q: Ceteris paribus
Ans: All other things remaining equal
Q: Circular flow of income
Ans: The flow of national output, income and expenditure between firms and
households.
Q: Command economy
Ans: An economy where only the government determines the allocation of
resources.
Q: Comparative advantage
Ans: When the opportunity cost of producing a good or service is lower than
that of any other country.
Q: Competition policy
Edexcel A-Level Economics A: Definitions
Questions and Answers 100% Correct Answers
Already Graded A+
Q: Absolute advantage
Ans: When a country's output of a product per unit of input is greater than that
of any other country.
Q: Absolute poverty
Ans: When a person does not have the income or wealth to fulfil their basic
Exampromax - Stuvia US
needs.
Q: Aggregate Demand (AD)
Ans: 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.
Q: Aggregate Supply (AS)
Ans: 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.
Q: Aid
Ans: The transfer of resources from one country to another.
Q: Allocative efficiency
Ans: Where the price of a good is equal to the price consumers are willing to
pay. This occurs when all resources are allocated efficiently.
Q: Asymmetric information
Ans: Where buyers have more information than sellers in a market, or vice
versa.
, 2 Exampromax - Stuvia US
Q: Automatic stabilisers
Ans: Parts of fiscal policy that automatically react to changes in the economic
cycle.
Q: Average Cost (AC)
Ans: The cost of production per unit of output.
Q: Average Revenue (AR)
Ans: The revenue per unit sold.
Q: Backward vertical integration
Ans: Where a firm merges with or takes over a firm further back in the
production process.
Exampromax - Stuvia US
Q: Balance of payments
Ans: A record of the international transactions of an economy.
Q: Bank rate
Ans: The official rate of interest set by the central bank (e.g. by the Monetary
Policy Committee of the Bank of England)
Q: Barriers to entry
Ans: Potential difficulties that make it hard for firms to enter a market.
Q: Barriers to exit
Ans: Potential difficulties that make it hard for firms to leave a market.
Q: Black market
Ans: Economic activity that occurs without taxation and government
intervention.
Q: Budget deficit
, 3 Exampromax - Stuvia US
Ans: When government spending exceeds tax revenues.
Q: Budget surplus
Ans: When tax revenues exceed government spending.
Q: Capital account of the balance of payments
Ans: A part of the balance of payments that shows transfers of non-monetary
and fixed assets into and out of the economy.
Q: Cartel
Ans: A group of products who collude to limit output in order to keep prices
high.
Exampromax - Stuvia US
Q: Central bank
Ans: The institution responsible for issuing banknotes in an economy, acting as
a lender of last resort, and implementing monetary policy.
Q: Ceteris paribus
Ans: All other things remaining equal
Q: Circular flow of income
Ans: The flow of national output, income and expenditure between firms and
households.
Q: Command economy
Ans: An economy where only the government determines the allocation of
resources.
Q: Comparative advantage
Ans: When the opportunity cost of producing a good or service is lower than
that of any other country.
Q: Competition policy
