EDEXCEL GENERAL CERTIFICATE
OF EDUCATION (GCE)
PAPER [1/2/3]: MICROECONOMICS / MACROECONOMICS /
SYNOPTIC
EDEXCEL A-LEVEL ECONOMICS FINAL ASSESSMENT
COMPREHENSIVE ANALYSIS OF MARKET SYSTEMS,
ECONOMIC PERFORMANCE, AND GLOBAL ECONOMICS
SPRING SEMESTER EXAM [2025/2026]
Aggregate demand curve
Shows the relationship between the price level and equilibrium national income. As the price
level rises the equilibrium level of national income falls.
Animal spirits
Business confidence: the mood of managers and owners of firms about the future of their
industry and the wider economy.
Gross investment
1
The addition to capital stock, both to replace the existing capital stock which has been used up
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(depreciation) and the creation of additional capital.
, Investment
The addition to the capital stock of the economy.
Retained profit
Profit kept back by a firm for its own use which is not distributed to shareholders or used to pay
taxation.
Net exports or the net trade balance
Exports minus imports.
Aggregate supply curve
The relationship between the average level of prices in the economy and the level of total
output.
Full capacity
The level of output where no extra production can take place in the long run with existing
resources. The full capacity level of output for an economy is shown by the classical long run
aggregate supply curve or the vertical part of a Keynesian aggregate supply curve.
2
Short-run aggregate supply curve
Page
, The upward sloping aggregate supply curve which assumes that money wage rates are fixed.
Supply-side shocks
Factors such as changes in wage rates or commodity prices which cause the short run aggregate
supply curve to shift.
Circular flow of income
A model of the economy which shows the flow of goods, services and factors and their
payments around the economy.
Closed economy
An economy where there is no foreign trade.
Income
Rent, interest, wages and profits earned from wealth owned by economic actors.
Injections
In the circular flow of income, spending which is not generated by households including
investment, government spending and exports.
3
Page
National income
, The value of the output, expenditure or income of an economy over a period of time.
Open economy
An economy where there is trade with other countries.
Wealth
A stock of assets which can be used to generate a flow of production or income. For example,
physical wealth such as factories and machines is used to make goods and services.
Withdrawals or leakages
In the circular flow of income, spending by households which does not flow back to domestic
firms. It includes savings, taxes and imports.
Marginal propensity to import (MPM)
The increase in imports divided by the increase in income that caused them (i.e. change in M /
change in Y)
Marginal propensity to save (MPS)
The increase in saving divided by the increase in income that caused it (i.e. change in S / change
in Y)
4
Page
OF EDUCATION (GCE)
PAPER [1/2/3]: MICROECONOMICS / MACROECONOMICS /
SYNOPTIC
EDEXCEL A-LEVEL ECONOMICS FINAL ASSESSMENT
COMPREHENSIVE ANALYSIS OF MARKET SYSTEMS,
ECONOMIC PERFORMANCE, AND GLOBAL ECONOMICS
SPRING SEMESTER EXAM [2025/2026]
Aggregate demand curve
Shows the relationship between the price level and equilibrium national income. As the price
level rises the equilibrium level of national income falls.
Animal spirits
Business confidence: the mood of managers and owners of firms about the future of their
industry and the wider economy.
Gross investment
1
The addition to capital stock, both to replace the existing capital stock which has been used up
Page
(depreciation) and the creation of additional capital.
, Investment
The addition to the capital stock of the economy.
Retained profit
Profit kept back by a firm for its own use which is not distributed to shareholders or used to pay
taxation.
Net exports or the net trade balance
Exports minus imports.
Aggregate supply curve
The relationship between the average level of prices in the economy and the level of total
output.
Full capacity
The level of output where no extra production can take place in the long run with existing
resources. The full capacity level of output for an economy is shown by the classical long run
aggregate supply curve or the vertical part of a Keynesian aggregate supply curve.
2
Short-run aggregate supply curve
Page
, The upward sloping aggregate supply curve which assumes that money wage rates are fixed.
Supply-side shocks
Factors such as changes in wage rates or commodity prices which cause the short run aggregate
supply curve to shift.
Circular flow of income
A model of the economy which shows the flow of goods, services and factors and their
payments around the economy.
Closed economy
An economy where there is no foreign trade.
Income
Rent, interest, wages and profits earned from wealth owned by economic actors.
Injections
In the circular flow of income, spending which is not generated by households including
investment, government spending and exports.
3
Page
National income
, The value of the output, expenditure or income of an economy over a period of time.
Open economy
An economy where there is trade with other countries.
Wealth
A stock of assets which can be used to generate a flow of production or income. For example,
physical wealth such as factories and machines is used to make goods and services.
Withdrawals or leakages
In the circular flow of income, spending by households which does not flow back to domestic
firms. It includes savings, taxes and imports.
Marginal propensity to import (MPM)
The increase in imports divided by the increase in income that caused them (i.e. change in M /
change in Y)
Marginal propensity to save (MPS)
The increase in saving divided by the increase in income that caused it (i.e. change in S / change
in Y)
4
Page
