Edexcel A-Level Economics A Definitions Exam with Questions and Answers –
100% Solved
Absolute advantage - ✔✔✔-When a country's output of a product per unit of input is greater
than that of any other country.
Absolute poverty - ✔✔✔-When a person does not have the income or wealth to fulfil their
basic needs.
Aggregate Demand (AD) - ✔✔✔-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.
Aggregate Supply (AS) - ✔✔✔-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.
Aid - ✔✔✔-The transfer of resources from one country to another.
Allocative efficiency - ✔✔✔-Where the price of a good is equal to the price consumers are
willing to pay. This occurs when all resources are allocated efficiently.
Asymmetric information - ✔✔✔-Where buyers have more information than sellers in a market,
or vice versa.
Automatic stabilisers - ✔✔✔-Parts of fiscal policy that automatically react to changes in the
economic cycle.
Average Cost (AC) - ✔✔✔-The cost of production per unit of output.
Average Revenue (AR) - ✔✔✔-The revenue per unit sold.
,Edexcel A-Level Economics A Definitions Exam with Questions and Answers –
100% Solved
Backward vertical integration - ✔✔✔-Where a firm merges with or takes over a firm further
back in the production process.
Balance of payments - ✔✔✔-A record of the international transactions of an economy.
Bank rate - ✔✔✔-The official rate of interest set by the central bank (e.g. by the Monetary
Policy Committee of the Bank of England)
Barriers to entry - ✔✔✔-Potential difficulties that make it hard for firms to enter a market.
Barriers to exit - ✔✔✔-Potential difficulties that make it hard for firms to leave a market.
Black market - ✔✔✔-Economic activity that occurs without taxation and government
intervention.
Budget deficit - ✔✔✔-When government spending exceeds tax revenues.
Budget surplus - ✔✔✔-When tax revenues exceed government spending.
Capital account of the balance of payments - ✔✔✔-A part of the balance of payments that
shows transfers of non-monetary and fixed assets into and out of the economy.
Cartel - ✔✔✔-A group of products who collude to limit output in order to keep prices high.
Central bank - ✔✔✔-The institution responsible for issuing banknotes in an economy, acting as
a lender of last resort, and implementing monetary policy.
, Edexcel A-Level Economics A Definitions Exam with Questions and Answers –
100% Solved
Ceteris paribus - ✔✔✔-All other things remaining equal
Circular flow of income - ✔✔✔-The flow of national output, income and expenditure between
firms and households.
Command economy - ✔✔✔-An economy where only the government determines the allocation
of resources.
Comparative advantage - ✔✔✔-When the opportunity cost of producing a good or service is
lower than that of any other country.
Competition policy - ✔✔✔-Government policy aimed at reducing monopoly power in order to
increase efficiency and to ensure fairness for consumers.
Concentration ratio - ✔✔✔-A measure of the dominance of firms in a market.
Conglomerate integration - ✔✔✔-Where a firm merges with or takes over a firm in a
completely different market.
Consumer surplus - ✔✔✔-The difference between the price a consumer pays and the price they
were willing to pay.
Consumption - ✔✔✔-The purchase of goods and services.
Contestability - ✔✔✔-The degree to which new entrants find it easy to enter the market.
Cost-push inflation - ✔✔✔-Inflation caused by rising costs of production.
100% Solved
Absolute advantage - ✔✔✔-When a country's output of a product per unit of input is greater
than that of any other country.
Absolute poverty - ✔✔✔-When a person does not have the income or wealth to fulfil their
basic needs.
Aggregate Demand (AD) - ✔✔✔-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.
Aggregate Supply (AS) - ✔✔✔-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.
Aid - ✔✔✔-The transfer of resources from one country to another.
Allocative efficiency - ✔✔✔-Where the price of a good is equal to the price consumers are
willing to pay. This occurs when all resources are allocated efficiently.
Asymmetric information - ✔✔✔-Where buyers have more information than sellers in a market,
or vice versa.
Automatic stabilisers - ✔✔✔-Parts of fiscal policy that automatically react to changes in the
economic cycle.
Average Cost (AC) - ✔✔✔-The cost of production per unit of output.
Average Revenue (AR) - ✔✔✔-The revenue per unit sold.
,Edexcel A-Level Economics A Definitions Exam with Questions and Answers –
100% Solved
Backward vertical integration - ✔✔✔-Where a firm merges with or takes over a firm further
back in the production process.
Balance of payments - ✔✔✔-A record of the international transactions of an economy.
Bank rate - ✔✔✔-The official rate of interest set by the central bank (e.g. by the Monetary
Policy Committee of the Bank of England)
Barriers to entry - ✔✔✔-Potential difficulties that make it hard for firms to enter a market.
Barriers to exit - ✔✔✔-Potential difficulties that make it hard for firms to leave a market.
Black market - ✔✔✔-Economic activity that occurs without taxation and government
intervention.
Budget deficit - ✔✔✔-When government spending exceeds tax revenues.
Budget surplus - ✔✔✔-When tax revenues exceed government spending.
Capital account of the balance of payments - ✔✔✔-A part of the balance of payments that
shows transfers of non-monetary and fixed assets into and out of the economy.
Cartel - ✔✔✔-A group of products who collude to limit output in order to keep prices high.
Central bank - ✔✔✔-The institution responsible for issuing banknotes in an economy, acting as
a lender of last resort, and implementing monetary policy.
, Edexcel A-Level Economics A Definitions Exam with Questions and Answers –
100% Solved
Ceteris paribus - ✔✔✔-All other things remaining equal
Circular flow of income - ✔✔✔-The flow of national output, income and expenditure between
firms and households.
Command economy - ✔✔✔-An economy where only the government determines the allocation
of resources.
Comparative advantage - ✔✔✔-When the opportunity cost of producing a good or service is
lower than that of any other country.
Competition policy - ✔✔✔-Government policy aimed at reducing monopoly power in order to
increase efficiency and to ensure fairness for consumers.
Concentration ratio - ✔✔✔-A measure of the dominance of firms in a market.
Conglomerate integration - ✔✔✔-Where a firm merges with or takes over a firm in a
completely different market.
Consumer surplus - ✔✔✔-The difference between the price a consumer pays and the price they
were willing to pay.
Consumption - ✔✔✔-The purchase of goods and services.
Contestability - ✔✔✔-The degree to which new entrants find it easy to enter the market.
Cost-push inflation - ✔✔✔-Inflation caused by rising costs of production.
