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