EdExcEl A-lEvEl Economics PAPEr 2 ExAm
with AccurAtE AnswErs & ExPlAnAtions |
GuArAntEEd PAss | lAtEst vErsion 2026
1. Macroeconomics - ANSWER The study of the economy as a whole,
including inflation, growth and unemployment.
2. Aggregate demand - ANSWER The total of all demands or expenditures in
the economy at any given price.
3. Aggregate demand curve - ANSWER Shows the relationship between the
price level and equilibrium national income. As the price level rises the
equilibrium level of national income falls.
4. Animal spirits - ANSWER Business confidence: the mood of managers and
owners of firms about the future of their industry and the wider economy.
5. Gross investment - ANSWER The addition to capital stock, both to replace
the existing capital stock which has been used up (depreciation) and the
creation of additional capital.
6. Investment - ANSWER The addition to the capital stock of the economy.
7. Unemployment rate - ANSWER The number of those not in work, but
seeking work, divided by the labour force expresses as a percentage.
,8. Balance of payments account - ANSWER A record of all financial dealings
over a period of time between economic agents of one country and all other
countries.
9. Balance of trade - ANSWER The value of exports minus imports.
10.Capital and financial accounts - ANSWER That part of the balance of
payments account where flows of savings, investments and currency are
recorded.
11.Current account - ANSWER That part of the balance of payments account
where payments for the purchase and sale of goods and services are recorded
plus primart and secondary incomes.
12.Current balance - ANSWER The difference between the value of total
exports and total imports including flows of primary and secondary incomes.
13.Current account deficit or surplus - ANSWER A deficit exists when imports
are greater than exports; a surplus exists when the value of exports are
greater than imports.
14.Balanced budget - ANSWER A statement of spending and income plans by
government where spending is equal to its receipts, mainly tax revenues.
15.Bank of England base rate - ANSWER A rate of interest charged by the
Bank of England to banks to borrow money overnight. It is the most
important interest rate in the UK financial system because it influences other
, interest rates in the UK such as savings rates and rates of interest on loans by
banks.
16.Budget - ANSWER A statement of the spending and income plans of an
individual firm or government. The Budget is the yearly statement on
government spending and taxation plans in the UK.
17.Budget deficit - ANSWER A deficit which arises because government
spending is greater than its receipts. Government therefore has to borrow
money to finance the difference.
18.Budget surplus - ANSWER A government surplus arising from government
spending being less than its receipts. Government can use the difference to
repay part of the National Debt.
19.Contractionary fiscal policy - ANSWER Fiscal policy which leads to a fall
in aggregate demand.
20.Contractionary monetary policy - ANSWER Monetary policy which leads to
a fall in aggregate demand.
21.Direct tax - ANSWER A tax levied directly on individuals or companies
such as income tax or corporation tax.
22.Expansionary fiscal policy - ANSWER Fiscal policy which leads to an
increase in aggregate demand.
, 23.Expansionary monetary policy - ANSWER Monetary policy which leads to
an increase in aggregate demand.
24.Fiscal policy - ANSWER The use of taxes, government spending and
government borrowing by government to achieve its objectives.
25.Indirect tax - ANSWER A tax levied on goods or services, such as value
added tax, excise duties or council tax.
26.Instrument of policy - ANSWER An economic variable, such as the rate of
interest, income tax rate or government spending on education, which is
used to achieve a target of government policy.
27.Monetary policy - ANSWER The manipulation by government of monetary
variables, such as interest rates and the money supply, to achieve its
objectives.
28.National Debt - ANSWER The total accumulated borrowing of government
which remains to be paid to lenders.
29.Public sector net borrowing (PSNB) - ANSWER The official name given to
the difference between government spending and its receipts in the UK.
30.Public sector net debt (PSND) - ANSWER The official name given to the
national debt in the UK.
with AccurAtE AnswErs & ExPlAnAtions |
GuArAntEEd PAss | lAtEst vErsion 2026
1. Macroeconomics - ANSWER The study of the economy as a whole,
including inflation, growth and unemployment.
2. Aggregate demand - ANSWER The total of all demands or expenditures in
the economy at any given price.
3. Aggregate demand curve - ANSWER Shows the relationship between the
price level and equilibrium national income. As the price level rises the
equilibrium level of national income falls.
4. Animal spirits - ANSWER Business confidence: the mood of managers and
owners of firms about the future of their industry and the wider economy.
5. Gross investment - ANSWER The addition to capital stock, both to replace
the existing capital stock which has been used up (depreciation) and the
creation of additional capital.
6. Investment - ANSWER The addition to the capital stock of the economy.
7. Unemployment rate - ANSWER The number of those not in work, but
seeking work, divided by the labour force expresses as a percentage.
,8. Balance of payments account - ANSWER A record of all financial dealings
over a period of time between economic agents of one country and all other
countries.
9. Balance of trade - ANSWER The value of exports minus imports.
10.Capital and financial accounts - ANSWER That part of the balance of
payments account where flows of savings, investments and currency are
recorded.
11.Current account - ANSWER That part of the balance of payments account
where payments for the purchase and sale of goods and services are recorded
plus primart and secondary incomes.
12.Current balance - ANSWER The difference between the value of total
exports and total imports including flows of primary and secondary incomes.
13.Current account deficit or surplus - ANSWER A deficit exists when imports
are greater than exports; a surplus exists when the value of exports are
greater than imports.
14.Balanced budget - ANSWER A statement of spending and income plans by
government where spending is equal to its receipts, mainly tax revenues.
15.Bank of England base rate - ANSWER A rate of interest charged by the
Bank of England to banks to borrow money overnight. It is the most
important interest rate in the UK financial system because it influences other
, interest rates in the UK such as savings rates and rates of interest on loans by
banks.
16.Budget - ANSWER A statement of the spending and income plans of an
individual firm or government. The Budget is the yearly statement on
government spending and taxation plans in the UK.
17.Budget deficit - ANSWER A deficit which arises because government
spending is greater than its receipts. Government therefore has to borrow
money to finance the difference.
18.Budget surplus - ANSWER A government surplus arising from government
spending being less than its receipts. Government can use the difference to
repay part of the National Debt.
19.Contractionary fiscal policy - ANSWER Fiscal policy which leads to a fall
in aggregate demand.
20.Contractionary monetary policy - ANSWER Monetary policy which leads to
a fall in aggregate demand.
21.Direct tax - ANSWER A tax levied directly on individuals or companies
such as income tax or corporation tax.
22.Expansionary fiscal policy - ANSWER Fiscal policy which leads to an
increase in aggregate demand.
, 23.Expansionary monetary policy - ANSWER Monetary policy which leads to
an increase in aggregate demand.
24.Fiscal policy - ANSWER The use of taxes, government spending and
government borrowing by government to achieve its objectives.
25.Indirect tax - ANSWER A tax levied on goods or services, such as value
added tax, excise duties or council tax.
26.Instrument of policy - ANSWER An economic variable, such as the rate of
interest, income tax rate or government spending on education, which is
used to achieve a target of government policy.
27.Monetary policy - ANSWER The manipulation by government of monetary
variables, such as interest rates and the money supply, to achieve its
objectives.
28.National Debt - ANSWER The total accumulated borrowing of government
which remains to be paid to lenders.
29.Public sector net borrowing (PSNB) - ANSWER The official name given to
the difference between government spending and its receipts in the UK.
30.Public sector net debt (PSND) - ANSWER The official name given to the
national debt in the UK.
