A LEVEL ECONOMICS FINAL PAPER
PRACTICE QUESTIONS WITH VERIFIED
ANSWERS PACKAGE
●● Absolute poverty
Answer: When a person does not have the income or wealth to fulfil
their basic needs.
●● Aggregate Demand (AD)
Answer: 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)
Answer: 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
Answer: The transfer of resources from one country to another.
●● Allocative efficiency
Answer: 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
Answer: Where buyers have more information than sellers in a market,
or vice versa.
●● Automatic stabilisers
Answer: Parts of fiscal policy that automatically react to changes in the
economic cycle.
●● Average Cost (AC)
Answer: The cost of production per unit of output.
●● Average Revenue (AR)
Answer: The revenue per unit sold.
●● Backward vertical integration
Answer: Where a firm merges with or takes over a firm further back in
the production process.
●● Balance of payments
Answer: A record of the international transactions of an economy.
●● Bank rate
,Answer: 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
Answer: Potential difficulties that make it hard for firms to enter a
market.
●● Barriers to exit
Answer: Potential difficulties that make it hard for firms to leave a
market.
●● Black market
Answer: Economic activity that occurs without taxation and government
intervention.
●● Budget deficit
Answer: When government spending exceeds tax revenues.
●● Budget surplus
Answer: When tax revenues exceed government spending.
●● Capital account of the balance of payments
, Answer: A part of the balance of payments that shows transfers of non-
monetary and fixed assets into and out of the economy.
●● Cartel
Answer: A group of products who collude to limit output in order to
keep prices high.
●● Central bank
Answer: The institution responsible for issuing banknotes in an
economy, acting as a lender of last resort, and implementing monetary
policy.
●● Ceteris paribus
Answer: All other things remaining equal
●● Circular flow of income
Answer: The flow of national output, income and expenditure between
firms and households.
●● Command economy
Answer: An economy where only the government determines the
allocation of resources.
●● Comparative advantage
PRACTICE QUESTIONS WITH VERIFIED
ANSWERS PACKAGE
●● Absolute poverty
Answer: When a person does not have the income or wealth to fulfil
their basic needs.
●● Aggregate Demand (AD)
Answer: 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)
Answer: 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
Answer: The transfer of resources from one country to another.
●● Allocative efficiency
Answer: 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
Answer: Where buyers have more information than sellers in a market,
or vice versa.
●● Automatic stabilisers
Answer: Parts of fiscal policy that automatically react to changes in the
economic cycle.
●● Average Cost (AC)
Answer: The cost of production per unit of output.
●● Average Revenue (AR)
Answer: The revenue per unit sold.
●● Backward vertical integration
Answer: Where a firm merges with or takes over a firm further back in
the production process.
●● Balance of payments
Answer: A record of the international transactions of an economy.
●● Bank rate
,Answer: 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
Answer: Potential difficulties that make it hard for firms to enter a
market.
●● Barriers to exit
Answer: Potential difficulties that make it hard for firms to leave a
market.
●● Black market
Answer: Economic activity that occurs without taxation and government
intervention.
●● Budget deficit
Answer: When government spending exceeds tax revenues.
●● Budget surplus
Answer: When tax revenues exceed government spending.
●● Capital account of the balance of payments
, Answer: A part of the balance of payments that shows transfers of non-
monetary and fixed assets into and out of the economy.
●● Cartel
Answer: A group of products who collude to limit output in order to
keep prices high.
●● Central bank
Answer: The institution responsible for issuing banknotes in an
economy, acting as a lender of last resort, and implementing monetary
policy.
●● Ceteris paribus
Answer: All other things remaining equal
●● Circular flow of income
Answer: The flow of national output, income and expenditure between
firms and households.
●● Command economy
Answer: An economy where only the government determines the
allocation of resources.
●● Comparative advantage
