Paper 2

Question 1

Define economic growth

Answer 1

Increases in GDP over time

Question 2

Define gross domestic product

Answer 2

The value of output produced within a country in a year

Question 3

Define GDP per capita

Answer 3

GDP divided by population

Question 4

Define employment

Answer 4

When people who are willing and able to work can find a job

Question 5

Define unemployment

Answer 5

When people who are willing and able to work cannot find a job

Question 6

Define claimant count

Answer 6

A measurement of unemployment using the number of people who claim unemployment-related benefits

Question 7

Define types of unemployment

Answer 7

Different causes of workers being unable to find a job

Question 8

Define cyclical unemployment

Answer 8

Workers without employment due to a fall in total demand for goods and services

Question 9

Define frictional unemployment

Answer 9

Workers without employment as they move from on job to another

Question 10

Define seasonal unemployment

Answer 10

Workers without employment due to a decrease in demand at certain times of year

Question 11

Define structural unemployment

Answer 11

Workers without employment due to the decline of an industry

Question 12

Define distribution of income

Answer 12

This describes how income is divided between individuals and households in a country

Question 13

Define income

Answer 13

A flow of money over time, often as a reward for use of a factor of production

Question 14

Define wealth

Answer 14

The monetary value of all the assets owned by an individual person, firm or country at a specific time

Question 15

Define price stability

Answer 15

When the general price level either stays the same or rises at a low rate over time

Question 16

Define inflation

Answer 16

A sustained increase in the general price level

Question 17

Define real values

Answer 17

The value of an economic variable that takes account of changes in the general price level overtime

Question 18

Define nominal values

Answer 18

The value of an economic variable based on current prices

Question 19

Define consumer price index (CPI)

Answer 19

A measure of the general price level used to calculate the inflation rate

Question 20

Define government spending

Answer 20

The total amount of money spent by the government in a given time period

Question 21

Define government revenue

Answer 21

The amount of money the government receives

Question 22

Define direct tax

Answer 22

A tax on income and wealth

Question 23

Define indirect tax

Answer 23

A tax on spending which is imposed on the producer but may then be passed on to consumers through an increase in price

Question 24

Define balanced government budget

Answer 24

When revenue is equal to government spending

Question 25

Define budget surplus

Answer 25

When revenue is greater than government spending

Question 26

Define budget deficit

Answer 26

When revenue is less than government spending

Question 27

Define fiscal policy

Answer 27

A policy that uses taxation and government spending to affect the economy as a whole

Question 28

Define progressive taxes

Answer 28

Taxes that take a greater percentage of tax the higher the income

Question 29

Define monetary policy

Answer 29

A policy that aims to control the total supply of money in the economy to try to achieve the government's economic objectives, in particular price stability

Question 30

Define supply-side policy

Answer 30

Any policy that helps to increase a country's productive potential

Question 31

Define externality

Answer 31

The impact of an economic transaction on a third party

Question 32

Define positive externality

Answer 32

The benefit of an economic transaction for a third party

Question 33

Define negative externality

Answer 33

The cost of an economic transaction for a third party

Question 34

Define taxation

Answer 34

Government collection of money from individuals and firms

Question 35

Define subsidies

Answer 35

A sum of money given by the government to firms to encourage production and consumption

Question 36

Define state provision

Answer 36

Government intervention in a market to supply a good or service direct to consumers

Question 37

Define legalisation

Answer 37

A law created by government to control the way individuals or firms behave

Question 38

Define regulation

Answer 38

A rule from the government that firms and/or consumers have to follow

Question 39

Define information provision

Answer 39

Government intervention in a market to give knowledge that might change behaviour

Question 40

Define imports

Answer 40

Goods and services bought from abroad. There is an outflow of money from the domestic country

Question 41

Define exports

Answer 41

Goods and services sold abroad. There is an inflow of money into the domestic country

Question 42

Define free trade agreement

Answer 42

Arrangement to move goods and services between countries without any restrictions

Question 43

Define European Union (EU)

Answer 43

An economic and political group of countries in Europe that have free trade with eachother

Question 44

Define balance of payments

Answer 44

The record of all financial transactions between one country and the rest of the world

Question 45

Define balance of payments on current account

Answer 45

The total of net trade in goods and services, income flows and transfers between one country and the rest of the world

Question 46

Define current account

Answer 46

The record of trade in goods and services, income flows and transfers between one country and the rest of the world

Question 47

Define balanced current account

Answer 47

Where the sum of exports plus the inflow of income and transfers is equal to the sum of imports plus the outflow of income and transfers

Question 48

Define current account surplus

Answer 48

Where the sum of exports plus the inflow of income and transfers is greater than the sum of imports plus the outflow of income and transfers

Question 49

Define current account deficit

Answer 49

Where the sum of exports plus the inflow of income and transfers is less than the sum of imports plus the outflow of income and transfers

Question 50

Define exchange rate

Answer 50

The price of one currency in terms of another currency

Question 51

Define currency

Answer 51

The system of money used in a country or group of countries

Question 52

Define globalisation

Answer 52

Integration of countries through trade

Question 53

Define development

Answer 53

The process of increasing people's standard of living and wellbeing over time

Question 54

Define developed country

Answer 54

A country with high GDP per capita and established industry and services

Question 55

Define less developed country

Answer 55

A country with a developing economy that has lower GDP per capita, lower levels of industrialisation and weaker indicators of wellbeing