EDEXCEL: A-Level Economics A 2024
Paper 2 Theme 1-3 Questions with 100%
Correct Answers
what is GDP an indicator of? - Answer>>the standard of living in
a country
what is the standard measure of economic growth? -
Answer>>rate of change of GDP
what is the difference between total and per capita GDP? -
Answer>>total is the overall GDP for a country and per capita is
total GDP/population
when does GDP per capita grow? - Answer>>when national
output grows faster than the opoulation
what is the difference between real and nominal GDP? -
Answer>>real GDP takes into account inflation but nominal
doesn't
what is the difference between volume and value? -
Answer>>volume is adjusted for inflation
value is monetary value at prices of the day = volume x price
what is gross national income? - Answer>>GDP and net
overseas interest and dividends
- starting to be used more due to remittances and aid
what is gross national product? - Answer>>GDP by any citizens
or property of a country anywher e in the world
how is growth used to compare over time (2)? - Answer>>- put
figures into context
,- make judgements about welfare
what must you use when comparing countries' GDPs and why? -
Answer>>real GDP per capita as population growth varies and
inflation would effect it
what must you consider when making comparisons in GDP
between countries? - Answer>>must use per capita as total
doesn't show living standards and could just increase due to
increase in prices
what is PPP and how is it measured? - Answer>>this is an
exchange rate which compares how much a typical basket of
goods costs in one country
why is PPP useful for comparing countries? - Answer>>takes
into account cost of living
what is an example of PPP index? - Answer>>the big mac
index
what are the limitations to using GDP to compare standard of
living (6)? - Answer>>- inaccuracy of data: inefficient
collecting/calculation, black market, home produced services,
errors in inflation calculation, no transfer payments
- inequalities: increase in GDP may only benefit wealthy
- quality of g+s: improvement over time not reflected
- comparing currency: converted to US but ppl say u should use
PPP instead
- spending: some doesn't improve living standard but does GDP
e.g. defence
- other factors: like education
,how is national happiness measured? - Answer>>using the
measuring national wellbeing report
what are the key questions in the national wellbeing report? -
Answer>>life satisfaction, anxiety, happiness and
worthwhileness
how are real incomes and subjective happiness related? -
Answer>>they are positively related at low incomes but higher
levels of income aren't correlated
what is the name for the term suggesting that those on higher
incomes aren't happier when their incomes increase? -
Answer>>easterlin paradox
what else does income and happiness depend on other than each
other? - Answer>>the people around you - you are happier if
you have a higher income than those around you - linked to social
status
what is the difference between inflation, deflation and disinflation?
- Answer>>inflation: general increase of prices in economy
deflation: fall of prices
disinflation: reduction in rate of inflation
what are the most well-known indices for calculating rate of
inflation and which is used most? - Answer>>consumer price
index and retail price index, CPI is used
how is the CPI calculated ? - Answer>>living costs and food
survey is used
weighted basket of goods
measures average price change of goods
update annually
, what are the limitations of CPI (4)? - Answer>>- doesn't
represent every good
- people spend differently
- doesn't include housing
- difficult to make comparisons with past as it is new
what is the difference between RPI and CPI? - Answer>>RPI
includes:
- housing: mortgage and interest payments
- CPI takes into account that people switch products when prices
change
- RPI excludes top 4% of incomes and low income pensioners
what are the three types of inflation? - Answer>>cost push
demand pull
growth in money supply
what is demand pull inflation? - Answer>>increase in AD
what is cost push inflation? - Answer>>decrease in AS -
businesses put up prices when costs rise to maintain profit margin
what are the effects of inflation on consumers (3)? - Answer>>-
if incomes don't rise they spend less and SoL falls
- those in debt have cheaper payments and savers lose out
- psychological effects of feeling less wealthy
what are the effects of inflation on firms (4)? - Answer>>- if
inflation high then less competitive abroad
- deflation means investment postponed, less demand = less
profit = long term less invest
- difficult to predict so can't plan
- menu pricing costs
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