As Level Economics CIE 2025 revision

Question 1

What is the definition of economics?

Answer 1

Economics is the study of how individuals and societies allocate scarce resources to satisfy unlimited wants.

Question 2

True or False: Microeconomics deals with individual economic units.

Answer 2

True

Question 3

Fill in the blank: The law of demand states that, all else being equal, as the price of a good increases, the __________ for that good decreases.

Answer 3

quantity demanded

Question 4

What does GDP stand for?

Answer 4

Gross Domestic Product

Question 5

Which of the following is NOT a factor of production: Land, Labor, Capital, or Money?

Answer 5

Money

Question 6

What is opportunity cost?

Answer 6

Opportunity cost is the value of the next best alternative that is forgone when a choice is made.

Question 7

True or False: A shift in the demand curve to the right indicates an increase in demand.

Answer 7

True

Question 8

What does elasticity measure in economics?

Answer 8

Elasticity measures the responsiveness of quantity demanded or supplied to a change in price.

Question 9

Fill in the blank: The market equilibrium occurs where __________ equals quantity supplied.

Answer 9

quantity demanded

Question 10

What is a public good?

Answer 10

A public good is a good that is non-excludable and non-rivalrous, meaning it is available for everyone to use without depletion.

Question 11

True or False: Monopolies lead to higher prices and lower output compared to competitive markets.

Answer 11

True

Question 12

What is the main aim of fiscal policy?

Answer 12

The main aim of fiscal policy is to influence the economy through government spending and taxation.

Question 13

What is the difference between a recession and a depression?

Answer 13

A recession is a period of economic decline lasting at least two quarters, while a depression is a more severe and prolonged downturn.

Question 14

Fill in the blank: Inflation is measured by the __________ index.

Answer 14

Consumer Price

Question 15

What is the role of the central bank?

Answer 15

The central bank manages a country’s currency, money supply, and interest rates.

Question 16

True or False: Supply-side policies aim to increase aggregate supply and improve economic performance.

Answer 16

True

Question 17

What does the term ‘monetary policy’ refer to?

Answer 17

Monetary policy refers to the actions taken by a central bank to control the money supply and interest rates.

Question 18

What is the difference between nominal GDP and real GDP?

Answer 18

Nominal GDP measures a country’s economic output without adjusting for inflation, while real GDP adjusts for inflation.

Question 19

Fill in the blank: A budget deficit occurs when government __________ exceed government revenues.

Answer 19

expenditures

Question 20

What is a price ceiling?

Answer 20

A price ceiling is a maximum price set by the government for a particular good or service.

Question 21

True or False: A negative externality occurs when the production or consumption of a good causes a harmful effect on a third party.

Answer 21

True

Question 22

What are the four types of market structures?

Answer 22

Perfect competition, monopolistic competition, oligopoly, and monopoly.

Question 23

Fill in the blank: The law of supply states that, all else being equal, as the price of a good increases, the __________ for that good increases.

Answer 23

quantity supplied

Question 24

What is the purpose of tariffs?

Answer 24

Tariffs are used to protect domestic industries by making imported goods more expensive.

Question 25

True or False: Economic growth can be measured by the increase in real GDP.

Answer 25

True

Question 26

What is the business cycle?

Answer 26

The business cycle is the fluctuation in economic activity that an economy experiences over time.

Question 27

What is a subsidy?

Answer 27

A subsidy is a government payment to support a business or market, lowering the cost of production.

Question 28

Fill in the blank: The __________ effect describes how a change in price affects consumer purchasing power.

Answer 28

income

Question 29

What is the significance of the production possibilities frontier (PPF)?

Answer 29

The PPF illustrates the maximum possible output combinations of two goods that can be produced with available resources.

Question 30

True or False: A trade surplus occurs when a country's exports exceed its imports.

Answer 30

True

Question 31

What is the role of competition in a market economy?

Answer 31

Competition encourages efficiency, innovation, and better prices for consumers.

Question 32

Fill in the blank: A __________ is a situation in which the demand for a product exceeds its supply.

Answer 32

shortage

Question 33

What does Ceteris Paribus mean?

Answer 33

Ceteris Paribus means 'all other things being equal' and is used to analyze the effect of one variable in isolation.

Question 34

What is a monopoly?

Answer 34

A monopoly is a market structure where a single seller dominates the market with no close substitutes.

Question 35

True or False: The circular flow of income model illustrates how money moves through the economy.

Answer 35

True

Question 36

What is the difference between demand-pull inflation and cost-push inflation?

Answer 36

Demand-pull inflation occurs when demand exceeds supply, while cost-push inflation occurs when production costs increase.

Question 37

Fill in the blank: A __________ is a tax on income earned by individuals and businesses.

Answer 37

income tax

Question 38

What is the primary purpose of economic indicators?

Answer 38

Economic indicators are used to assess the health of an economy and predict future economic activity.

Question 39

What does the term 'factors of production' refer to?

Answer 39

Factors of production refer to the resources used to produce goods and services, including land, labor, capital, and entrepreneurship.

Question 40

True or False: An increase in interest rates typically leads to a decrease in consumer spending.

Answer 40

True

Question 41

What is the significance of the consumer surplus?

Answer 41

Consumer surplus is the difference between what consumers are willing to pay and what they actually pay, indicating economic welfare.

Question 42

Fill in the blank: The __________ curve shows the relationship between the price level and the quantity of goods and services supplied.

Answer 42

aggregate supply

Question 43

What is the difference between a recession and a recovery?

Answer 43

A recession is a decline in economic activity, while recovery is the phase where the economy begins to grow again after a recession.

Question 44

What does the term 'market failure' refer to?

Answer 44

Market failure occurs when the allocation of goods and services is not efficient, leading to a loss of economic welfare.

Question 45

True or False: Government intervention is sometimes necessary to correct market failures.

Answer 45

True

Question 46

What is the purpose of antitrust laws?

Answer 46

Antitrust laws are designed to promote competition and prevent monopolistic practices.

Question 47

Fill in the blank: The __________ effect occurs when consumers change their purchasing behavior based on price changes.

Answer 47

substitution

Question 48

What is the primary goal of supply-side economics?

Answer 48

The primary goal of supply-side economics is to stimulate production by lowering taxes and reducing regulation.