economics aqa alevel Flashcards
What is the basic economic problem?
Scarcity of resources.
Define opportunity cost.
The cost of the next best alternative foregone.
What does GDP stand for?
Gross Domestic Product.
True or False: Inflation decreases the purchasing power of money.
True.
What is the formula for calculating GDP using the expenditure approach?
GDP = C + I + G + (X - M), where C = consumption, I = investment, G = government spending, X = exports, M = imports.
What is a market economy?
An economic system where decisions are made by supply and demand.
Fill in the blank: The law of ______ states that as the price of a good increases, the quantity supplied increases.
Supply.
What is the main goal of monetary policy?
To control inflation and stabilize the currency.
True or False: A recession is defined as two consecutive quarters of negative GDP growth.
True.
What is fiscal policy?
Government policy regarding taxation and spending to influence the economy.
What is the difference between nominal and real GDP?
Nominal GDP is measured at current prices, while real GDP is adjusted for inflation.
What are externalities?
Costs or benefits that affect third parties not involved in a transaction.
Define price elasticity of demand.
The responsiveness of quantity demanded to a change in price.
What is a public good?
A good that is non-excludable and non-rivalrous in consumption.
True or False: Perfect competition is characterized by many buyers and one seller.
False.
What is the role of the central bank?
To manage the nation’s currency, money supply, and interest rates.
Fill in the blank: A ______ is a graphical representation of the relationship between price and quantity supplied.
Supply curve.
What is the difference between a recession and a depression?
A recession is a temporary economic decline, while a depression is a prolonged and severe downturn.
Define monopoly.
A market structure where a single seller dominates the market.
What does the term ‘invisible hand’ refer to?
The self-regulating nature of the marketplace.
What is consumer surplus?
The difference between what consumers are willing to pay and what they actually pay.
True or False: A budget deficit occurs when government spending exceeds revenue.
True.
What is the business cycle?
The fluctuations in economic activity over time, including expansion and contraction.
What is a tariff?
A tax imposed on imported goods.
Fill in the blank: The ______ curve shows the relationship between the price level and the quantity of output supplied.
Aggregate supply.
Define inflation.
The rate at which the general level of prices for goods and services rises.
What is the main purpose of the Consumer Price Index (CPI)?
To measure changes in the price level of a basket of consumer goods and services.
True or False: The labor force includes both employed and unemployed individuals actively seeking work.
True.
What is a subsidy?
A government payment to support a business or market.
What does the term ‘stagflation’ mean?
A situation of stagnant economic growth combined with inflation.
Fill in the blank: The ______ is the total value of all final goods and services produced in a country in a given time period.
GDP.
What is the difference between fixed and variable costs?
Fixed costs do not change with output, while variable costs do.
What is the purpose of antitrust laws?
To prevent monopolies and promote competition.
True or False: Demand-pull inflation occurs when demand exceeds supply.
True.
What is elasticity?
A measure of how much quantity demanded or supplied responds to a change in price.
What is the main characteristic of oligopoly?
A market structure where a few large firms dominate the market.
Fill in the blank: The ______ is the amount of goods and services that consumers are willing to purchase at a given price.
Quantity demanded.
What does the term ‘monetary policy’ refer to?
The process by which the central bank controls the money supply.
What is a trade deficit?
When a country’s imports exceed its exports.
True or False: The law of demand states that as the price of a good decreases, the quantity demanded increases.
True.
What is the purpose of a price ceiling?
To prevent prices from rising above a certain level.
Fill in the blank: A ______ is a market structure characterized by many sellers offering similar products.
Monopolistic competition.
What is the impact of a negative externality?
It imposes costs on third parties not involved in the transaction.
Define the term ‘scarcity.’
The limited nature of society’s resources.
What is the significance of the Phillips Curve?
It illustrates the inverse relationship between inflation and unemployment.
What does ‘crowding out’ refer to?
When government spending reduces private sector investment.
True or False: A command economy is one where the government makes all economic decisions.
True.
What is the primary function of the labor market?
To match workers with employers.
Fill in the blank: The ______ effect refers to the change in consumer demand due to a change in purchasing power.
Income.
What is the purpose of the World Trade Organization (WTO)?
To regulate international trade and resolve trade disputes.
What is a mixed economy?
An economic system combining private and public enterprise.
Define ‘market failure.’
A situation where the allocation of goods and services is not efficient.
What is the role of competition in a market economy?
To drive innovation and lower prices.
True or False: Economic growth is measured by an increase in real GDP.
True.
What is a recession?
A period of temporary economic decline during which trade and industrial activity are reduced.
Fill in the blank: The ______ is the price at which the quantity demanded equals the quantity supplied.
Equilibrium price.
What does the term ‘demand-pull inflation’ mean?
Inflation caused by an increase in demand for goods and services.
What is the significance of the Laffer Curve?
It illustrates the relationship between tax rates and tax revenue.
True or False: Supply-side economics emphasizes tax cuts to increase production.
True.
What is a financial market?
A marketplace for buying and selling financial assets.
Fill in the blank: The ______ effect occurs when consumers change their spending habits based on price changes.
Substitution.
What is a budget surplus?
When government revenue exceeds its expenses.
What does the term ‘capital goods’ refer to?
Goods used to produce other goods and services.
True or False: The marginal cost of production is the cost of producing one more unit of a good.
True.
What is the purpose of antitrust policies?
To promote competition and prevent monopolistic behavior.
Fill in the blank: The ______ curve shows the relationship between the price level and the quantity of output demanded.
Aggregate demand.
What is the difference between short-run and long-run aggregate supply?
Short-run aggregate supply is influenced by price levels, while long-run aggregate supply is determined by resources and technology.
What is the significance of the trade balance?
It indicates the difference between a country’s exports and imports.
True or False: Structural unemployment occurs due to shifts in the economy.
True.
What is the role of government in a capitalist economy?
To enforce laws and regulations that promote fair competition.
