Paper 2 Key Terms

Question 1

What is GDP ?

Answer 1

Value of output produced within a country in a year

Question 2

What is employment?

Answer 2

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

Question 3

What is unemployment?

Answer 3

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

Question 4

What is the claimant count?

Answer 4

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

Question 5

What is the level of unemployment?

Answer 5

The total number of people who are in the workforce and are without a job

Question 6

What is cyclical unemployment?

Answer 6

Unemployment due to a fall in total demand for goods and services

Question 7

What is frictional unemployment?

Answer 7

Unemployment due to the moving between different jobs

Question 8

What is seasonal unemployment?

Answer 8

Unemployment due to a decrease in demand at certain times of the year

Question 9

What is structural unemployment?

Answer 9

Unemployment due to the decline of an industry

Question 10

What is the distribution of income ?

Answer 10

Describes how income is divided between individuals and households in a country

Question 11

What is income ?

Answer 11

A flow of money as a payment for working, it is earned

Question 12

What is wealth ?

Answer 12

It is the total value of all your assets

Question 13

What is price stability?

Answer 13

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

Question 14

What is inflation ?

Answer 14

A sustained increase in the general price level

Question 15

What is real values ?

Answer 15

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

Question 16

What is nominal value ?

Answer 16

Value of an economic variable based on current prices

Question 17

What is the CPI ?

Answer 17

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

Question 18

What is government revenue?

Answer 18

The amount of money the government receives

Question 19

What is government spending ?

Answer 19

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

Question 20

What is direct tax ?

Answer 20

A tac on income and wealth

Question 21

What is an indirect tax ?

Answer 21

A tax on purchasing certain goods or services

Question 22

What is a balanced budget ?

Answer 22

When revenue = spending

Question 23

What is a budget surplus ?

Answer 23

When revenue is greater than government spending

Question 24

What is a budget deficit?

Answer 24

When revenue is less than government spending

Question 25

What is fiscal policy ?

Answer 25

A policy that aims to control the economy with the use of taxation and government spending

Question 27

What is progressive tax ?

Answer 27

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

Question 28

What is monetary policy ?

Answer 28

A policy that aims to control the total supply of money, to achieve economic objectives such as price stability

Question 29

What is supply side policy ?

Answer 29

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

Question 30

What is an externality ?

Answer 30

Impact of an economic transaction on a third party

Question 31

What is a positive externality ?

Answer 31

The benefit of an economic transaction from a third party

Question 32

What is a negative externality ?

Answer 32

The cost of an economic transaction for a third party

Question 33

What is taxation ?

Answer 33

Government collection of money from individuals and firms

Question 34

What is an indirect tax ?

Answer 34

Tax raised on spending on goods and services

Question 35

What is a subsidy

Answer 35

Sum of money given by government to firms to encourage production and consumption

Question 36

What is state provision ?

Answer 36

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

Question 37

What is legislation?

Answer 37

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

Question 38

What is regulation ?

Answer 38

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

Question 39

What is information provision ?

Answer 39

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

Question 40

What is international trade ?

Answer 40

The exchange of goods and services between countries

Question 42

What are imports ?

Answer 42

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

Question 43

What are exports ?

Answer 43

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

Question 44

What is a free trade agreement?

Answer 44

Arrangement to move goods and services between countries without restrictions

Question 45

What is the balance of payments?

Answer 45

Record of all the financial transactions between 1 country and the rest of the world

Question 46

What is the current account ?

Answer 46

The record of trade in goods and services, income flows and transfers between 1 country and the rest of the world

Question 47

What is a balanced current account ?

Answer 47

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

What is a 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

What is a 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

What is an exchange rate ?

Answer 50

The price of one currency in terms of another currency

Question 51

What is globalisation ?

Answer 51

The integration of countries through trade

Question 52

What is development?

Answer 52

The process of increasing peoples standard of living and wellbeing over time