AS LEVEL ECONOMICS A: THE UK ECONOMY: PERFORMANCE AND POLICIES CERTIFICATION SCRIPT 2026 QUESTIONS WITH SOLUTIONS GRADED A+

AS LEVEL ECONOMICS A: THE UK
ECONOMY: PERFORMANCE AND POLICIES
CERTIFICATION SCRIPT 2026 QUESTIONS
WITH SOLUTIONS GRADED A+

◍ When does economic growth occur?.
Answer: When GDP rises
◍ What does GDP measure?.
Answer: The quantity of goods and services produced in an economy
◍ Balance of payments.
Answer: A record of all financial dealings over a period of time between
economic agents of one country and another
◍ What does economic growth lead to? (2).
Answer: Higher living standardsMore employment opportunities
◍ What is real GDP?.
Answer: The value of GDP adjusted for inflation
◍ Base year.
Answer: A year chosen as a good comparison in series of data when
building an index; it is automatically given an index figure of 100
◍ What is nominal GDP?.
Answer: The value of GDP without being adjusted for inflation
◍ What is total GDP?.
Answer: Combined monetary value of all goods and services produced
within a country's borders during a specific time period
◍ What is GDP per capita?.

, Answer: GDP divided by population
◍ Boom.
Answer: The peak of the business cycle, when growth is high
◍ Budget.
Answer: Where the government lays out their spending and taxation plans
◍ Budget deficit.
Answer: When the government spends more money than it receives
◍ Budget surplus.
Answer: When the government receives more money than it spends
◍ Circular flow.
Answer: A model of the economy which shows the flow of goods and
services, the factors of production and money around the economy
◍ What is Gross National Product (GNP)?.
Answer: The market value of all products produced in a year by the labour
and property supplied by the citizens of one country
◍ Claimant count.
Answer: A measure of unemployment; the number of people receiving
benefits for being unemployed
◍ What is Purchasing Power Parity (PPP)?.
Answer: An exchange rate adjustment that reflects differences in price levels
between countries
◍ Why is PPP used when comparing GDP?.
Answer: To make international comparisons of living standards more
accurate
◍ Consumer Price Index (CPI).
Answer: Official measure used to calculate the rate of inflation, using a
weighted basket of goods.
◍ What is one limitation of PPP?.

, Answer: Differences in baskets of goods and quality between countries
◍ Consumption.
Answer: Consumer spending on goods and services
◍ Why does GDP per capita not reflect income distribution?.
Answer: It is an average and does not show inequality within a country
◍ Why must GDP be adjusted using PPP?.
Answer: To reflect differences in cost of living between countries
◍ Cost push inflation.
Answer: Inflation caused by a decrease in AS
◍ Current account.
Answer: A record of the payments for the purchase and sale of goods and
services, as well as income and transfers
◍ How does the hidden economy affect GDP comparisons?.
Answer: Informal activity is not recorded, so GDP may be underestimated
◍ Current account deficit.
Answer: When more money leaves the country than enters, so the current
account is negative
◍ Why does GDP not fully measure welfare?.
Answer: It does not include non-monetary factors such as leisure,
environment, or happiness
◍ Current account surplus.
Answer: When more money enters the country than leaves, so the current
account is positive
◍ How does income relate to happiness?.
Answer: Income increases happiness at low income levels, but has a
diminishing impact at high income levels
◍ What does the ONS measure in national well-being? (4).
Answer: Life satisfactionHappinessAnxietySense of worthwhileness