AQA GCSE economics, short answer questions (2) covering some macro topics.
Questions:
Explain one way a fall in the UK exchange rate might affect UK businesses. [2 marks]
Explain one cause of economic growth. (2)
Explain one benefit of economic growth. (2)
Explain one benefit of free trade fo...
Explain one way a fall in the UK exchange rate might affect UK businesses. [2 marks]
One way a fall in the exchange rate might affect UK businesses is that they will suffer
lower profits as a result of higher costs. This is because overseas operations and raw
materials (and other factors of production) bought overseas that are paid for in
different currencies become more expensive (require more £ to be paid for).
Explain one cause of economic growth. (2)
An increase in the uptake of advanced education or retraining as a
result of government supply-side policies (such as making education
less expensive) may in the long run make the workforce more
productive. This means that the productive capabilities of the economy
will grow and the aggregate supply curve will shift to the right, driving
GDP higher and fuelling economic growth.
Explain one benefit of economic growth. (2)
One benefit of economic growth is higher living standards. This is
because due to the circular flow of income; one person’s spending is
another’s income. If there is economic growth, spending and so
therefore incomes will rise. This means people will have greater
disposable incomes and can spend more on goods and services that
increase their quality of life.
Explain one benefit of free trade for people in the UK (2)
One benefit of free trade for people in the UK is lower prices and better product
quality due to greater competition for producers. This is because free trade
breaks down the barriers of protectionism and allows trade to occur without the
extra cost of tariffs. This means that foreign firms become more competitive in
price and that UK firms are forced to lower their prices and increase their quality
of goods/services to compete. This overall results in people in the UK benefiting
from lower prices and better-quality products.
Explain what is meant by cyclical unemployment (3)
Cyclical unemployment is unemployment as a result of economic downturn. This
means that firms incomes may be falling or at risk and so they may cut their
employee count to survive the economic conditions. This will lead to a loss of
incomes for consumers and so they will have less disposable income to spend on
goods and services. Due to the circular flow of income, less spending will result in
lower sales for firms and a cycle of economic depression and further
unemployment. Cyclical unemployment is said to be the most damaging type of
unemployment due to the difficulty of breaking the cycle and fixing the economy.
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