paper 2

Question 1

what is Gross domestic product (GDP)

Answer 1

the total value of goods and services produced in the country in a year

Question 2

what is GDP per capita

Answer 2

GDP divided by the total population, therefore GDP per head.

Question 3

what is Economic Growth

Answer 3

growth in output of the economy over time - a growth of real GDP over time

Question 4

what is Full employment

Answer 4

when all those able and willing to work are in paid employment at the current wage rate

Question 5

what is Unemployment

Answer 5

when workers who are able and willing to work are unable to find employment (at current wage rates)

Question 6

what is the Claimant Count

Answer 6

measures unemployment according to the number of people claiming unemployment-related benefits ( such as Jobseeker’s Allowance)

Question 7

what is the Labour force survey

Answer 7

a survey of a sample of households, counting people as unemployed if they are actively seeking work but do not have a job (in the week of the survey).

Question 8

what is Inflation

Answer 8

A sustained rise in the general price level over time

Question 9

what is Price stability

Answer 9

the general level of prices is kept constant or grows at an acceptably low rate over time.

Question 10

what is Regressive tax

Answer 10

a tax that takes a greater proportion of income from lower incomes, or takes a smaller percentage of a higher income

Question 11

Progressive Tax definition

Answer 11

Tax that takes a greater proportion of income from higher incomes, or takes a smaller percentage of lower income

Question 12

what is a Balanced Budget

Answer 12

government spending is equal to tax revenue

Question 13

what is Budget Deficit

Answer 13

government spending is greater than tax revenue

Question 14

what is Budget Surplus

Answer 14

tax revenue is greater than government spending

Question 15

monetary policy

Answer 15

a policy that aims to control the total supply of money in the economy to try to achieve the government’s objectives, particularly price stability.

Question 16

fiscal policy

Answer 16

it’s the use of taxation and government spending to influence the level of economic activity

Question 17

what does fiscal policy achieve?

Answer 17

economic growth
low unemployment
price stability
a balance in the balance of payments

Question 18

expansionary fiscal policy

Answer 18

a policy used to increase aggregate demand by either increasing government spending, or decreasing taxation on the country

Question 19

contractionary fiscal policy

Answer 19

a policy that aims to gain a budget surplus and reduce inflation by decreasing government spending and increasing taxation on the country

Question 20

liquidity definition

Answer 20

ability to turn assets into cash for cash flows, to pay for current liabilities such as bills, wages etc

Question 21

reasons for current account deficit

Answer 21

low revenue from exports (due to low demand for exports)

high spending on imports

Question 22

current account deficit definition

Answer 22

where outflows are greater than inflows (export in goods and services is less than the sum of imports in goods and services)

Question 23

tariff definition

Answer 23

tax on imports

Question 24

quotas

Answer 24

physical limit to a good

Question 25

free trade agreement

Answer 25

an exchange of goods and services without a limitation

Question 26

what does supply side policies aim to achieve?

Answer 26

increase quantity of factors of production

increase efficiency of factors of production

Question 27

how does inflation lead to increase unemployment?

Answer 27

inflation increases the price of goods and services leading to a decrease in demand from other countries as the country becomes less competitive leading to an increase in unemployment as labour is a derived demand

Question 28

benefits of supply-side policies?

Answer 28

increase employment
increase economic
combats inflation