As Level Economics CIE 2025 revision Flashcards
What is the definition of economics?
Economics is the study of how individuals and societies allocate scarce resources to satisfy unlimited wants.
True or False: Microeconomics deals with individual economic units.
True
Fill in the blank: The law of demand states that, all else being equal, as the price of a good increases, the __________ for that good decreases.
quantity demanded
What does GDP stand for?
Gross Domestic Product
Which of the following is NOT a factor of production: Land, Labor, Capital, or Money?
Money
What is opportunity cost?
Opportunity cost is the value of the next best alternative that is forgone when a choice is made.
True or False: A shift in the demand curve to the right indicates an increase in demand.
True
What does elasticity measure in economics?
Elasticity measures the responsiveness of quantity demanded or supplied to a change in price.
Fill in the blank: The market equilibrium occurs where __________ equals quantity supplied.
quantity demanded
What is a public good?
A public good is a good that is non-excludable and non-rivalrous, meaning it is available for everyone to use without depletion.
True or False: Monopolies lead to higher prices and lower output compared to competitive markets.
True
What is the main aim of fiscal policy?
The main aim of fiscal policy is to influence the economy through government spending and taxation.
What is the difference between a recession and a depression?
A recession is a period of economic decline lasting at least two quarters, while a depression is a more severe and prolonged downturn.
Fill in the blank: Inflation is measured by the __________ index.
Consumer Price
What is the role of the central bank?
The central bank manages a country’s currency, money supply, and interest rates.
True or False: Supply-side policies aim to increase aggregate supply and improve economic performance.
True
What does the term ‘monetary policy’ refer to?
Monetary policy refers to the actions taken by a central bank to control the money supply and interest rates.
What is the difference between nominal GDP and real GDP?
Nominal GDP measures a country’s economic output without adjusting for inflation, while real GDP adjusts for inflation.
Fill in the blank: A budget deficit occurs when government __________ exceed government revenues.
expenditures
What is a price ceiling?
A price ceiling is a maximum price set by the government for a particular good or service.
True or False: A negative externality occurs when the production or consumption of a good causes a harmful effect on a third party.
True
What are the four types of market structures?
Perfect competition, monopolistic competition, oligopoly, and monopoly.
Fill in the blank: The law of supply states that, all else being equal, as the price of a good increases, the __________ for that good increases.
quantity supplied
What is the purpose of tariffs?
Tariffs are used to protect domestic industries by making imported goods more expensive.
True or False: Economic growth can be measured by the increase in real GDP.
True
What is the business cycle?
The business cycle is the fluctuation in economic activity that an economy experiences over time.
What is a subsidy?
A subsidy is a government payment to support a business or market, lowering the cost of production.
Fill in the blank: The __________ effect describes how a change in price affects consumer purchasing power.
income
What is the significance of the production possibilities frontier (PPF)?
The PPF illustrates the maximum possible output combinations of two goods that can be produced with available resources.
True or False: A trade surplus occurs when a country’s exports exceed its imports.
True
What is the role of competition in a market economy?
Competition encourages efficiency, innovation, and better prices for consumers.
Fill in the blank: A __________ is a situation in which the demand for a product exceeds its supply.
shortage
What does Ceteris Paribus mean?
Ceteris Paribus means ‘all other things being equal’ and is used to analyze the effect of one variable in isolation.
What is a monopoly?
A monopoly is a market structure where a single seller dominates the market with no close substitutes.
True or False: The circular flow of income model illustrates how money moves through the economy.
True
What is the difference between demand-pull inflation and cost-push inflation?
Demand-pull inflation occurs when demand exceeds supply, while cost-push inflation occurs when production costs increase.
Fill in the blank: A __________ is a tax on income earned by individuals and businesses.
income tax
What is the primary purpose of economic indicators?
Economic indicators are used to assess the health of an economy and predict future economic activity.
What does the term ‘factors of production’ refer to?
Factors of production refer to the resources used to produce goods and services, including land, labor, capital, and entrepreneurship.
True or False: An increase in interest rates typically leads to a decrease in consumer spending.
True
What is the significance of the consumer surplus?
Consumer surplus is the difference between what consumers are willing to pay and what they actually pay, indicating economic welfare.
Fill in the blank: The __________ curve shows the relationship between the price level and the quantity of goods and services supplied.
aggregate supply
What is the difference between a recession and a recovery?
A recession is a decline in economic activity, while recovery is the phase where the economy begins to grow again after a recession.
What does the term ‘market failure’ refer to?
Market failure occurs when the allocation of goods and services is not efficient, leading to a loss of economic welfare.
True or False: Government intervention is sometimes necessary to correct market failures.
True
What is the purpose of antitrust laws?
Antitrust laws are designed to promote competition and prevent monopolistic practices.
Fill in the blank: The __________ effect occurs when consumers change their purchasing behavior based on price changes.
substitution
What is the primary goal of supply-side economics?
The primary goal of supply-side economics is to stimulate production by lowering taxes and reducing regulation.
