Economics A-Level Edexcel A Theme 2 -Key Words Exam with Questions and
Answers – 100% Solved
Actual economic growth - ✔✔✔-The rate growth of GDP in a period
Aggregate demand - ✔✔✔-The total amount of spending on goods and services produced in an
economy during a period of time
Aggregate demand curve - ✔✔✔-The relationship between the AD and the overall price level; it
shoes planned expenditure at any given possible overall price level
Automatic stabilisers - ✔✔✔-Effects by which government expenditure adjusts to offset the
effects of recession and boom without the need for active intervention
Average propensity to consume - ✔✔✔-The proportion of income that households devote to
consumption
Balance of payments - ✔✔✔-Set of accounts showing transactions conducted between
residence of a country and the rest of the world
Bank rate - ✔✔✔-The interest rate that is set by the monetary policy committee of the BoE in
order to influence inflation
Business cycle - ✔✔✔-A phenomenon whereby GDP fluctuates around its underlying trend,
following a regular pattern
Capital productivity - ✔✔✔-A measure of output per unit of capital
Circular flow of income, expenditure and output - ✔✔✔-A model of the economy which shows
the movement of goods and services between households and firms and their corresponding
payments in money terms
, Economics A-Level Edexcel A Theme 2 -Key Words Exam with Questions and
Answers – 100% Solved
Claimant count of unemployment - ✔✔✔-The number of people claiming the Jobseekers
allowance each month
Consumer price index (CPI) - ✔✔✔-A measure of the general level of prices in the UK, the rate
of change of which has been used as the government's inflation target since January 2004
Consumption - ✔✔✔-Total planned household spending
Consumption function - ✔✔✔-The relationship between consumption and disposable income;
its position depends on the other factors that affect how much households spend on
consumption
Cost-push inflation - ✔✔✔-Inflation initiated by an increase in the costs faced by firms, arising
on the supply side
Crowding out - ✔✔✔-A process whereby government expenditure crowds out private sector
activity by raising the cost of borrowing
Cyclical unemployment - ✔✔✔-Unemployment that arises during the downturn of an economic
cycle, such as a recession
Deflation - ✔✔✔-A fall in the average level of prices (negative inflation)
Demand-deficient unemployment - ✔✔✔-Unemployment that arises because of a deficiency of
aggregate demand in the economy, so that the equilibrium level of output is below full
employment
Answers – 100% Solved
Actual economic growth - ✔✔✔-The rate growth of GDP in a period
Aggregate demand - ✔✔✔-The total amount of spending on goods and services produced in an
economy during a period of time
Aggregate demand curve - ✔✔✔-The relationship between the AD and the overall price level; it
shoes planned expenditure at any given possible overall price level
Automatic stabilisers - ✔✔✔-Effects by which government expenditure adjusts to offset the
effects of recession and boom without the need for active intervention
Average propensity to consume - ✔✔✔-The proportion of income that households devote to
consumption
Balance of payments - ✔✔✔-Set of accounts showing transactions conducted between
residence of a country and the rest of the world
Bank rate - ✔✔✔-The interest rate that is set by the monetary policy committee of the BoE in
order to influence inflation
Business cycle - ✔✔✔-A phenomenon whereby GDP fluctuates around its underlying trend,
following a regular pattern
Capital productivity - ✔✔✔-A measure of output per unit of capital
Circular flow of income, expenditure and output - ✔✔✔-A model of the economy which shows
the movement of goods and services between households and firms and their corresponding
payments in money terms
, Economics A-Level Edexcel A Theme 2 -Key Words Exam with Questions and
Answers – 100% Solved
Claimant count of unemployment - ✔✔✔-The number of people claiming the Jobseekers
allowance each month
Consumer price index (CPI) - ✔✔✔-A measure of the general level of prices in the UK, the rate
of change of which has been used as the government's inflation target since January 2004
Consumption - ✔✔✔-Total planned household spending
Consumption function - ✔✔✔-The relationship between consumption and disposable income;
its position depends on the other factors that affect how much households spend on
consumption
Cost-push inflation - ✔✔✔-Inflation initiated by an increase in the costs faced by firms, arising
on the supply side
Crowding out - ✔✔✔-A process whereby government expenditure crowds out private sector
activity by raising the cost of borrowing
Cyclical unemployment - ✔✔✔-Unemployment that arises during the downturn of an economic
cycle, such as a recession
Deflation - ✔✔✔-A fall in the average level of prices (negative inflation)
Demand-deficient unemployment - ✔✔✔-Unemployment that arises because of a deficiency of
aggregate demand in the economy, so that the equilibrium level of output is below full
employment
