Mick

Question 1

AD increases econ growth

Answer 1

Firms greater inventive to increase prod goods to match demand, more output do increase in real gdp

Question 2

Econ growth link to unemployment

Answer 2

As econ growth increases, unemployment falls - due to labour being derived demand

Greater demand for goods and services , greater demand for labour to increase

Question 3

AD effect on inflation

Answer 3

More pressure put on existing factors of economy , so prices increases
Eg - labour - workers demand higher wages
Increases costs, upward pressure on price which increase inflation

Question 4

Inflation link to exports

Answer 4

Inflation increases exports prices in ecocnont less competitive so demand falls
Reducing exports in economy and worsening trade position

Question 5

AS effect on LRAS

Answer 5

More remand goods and services
Extension of AD
Firms increase output

Question 6

LRAS effect on inflation

Answer 6

Reduced due to less competition for goods and services
Reduced cost pish infkationayr pressure

Makes trade position improve

Question 7

Evaluation points for AD and AS

Answer 7

Depends on initial level econ activity

AD- size of multiplier , extent of chnage

Question 8

one reason why ppp are used

Answer 8

to improve accuracy when. comparing data between countries
ppp calculated by comparing basket goods between countries

Question 9

gross. national income

Answer 9

GDP + net income paid into a country

Question 10

index number

Answer 10

shows percentage chang from base year

Question 11

recession

Answer 11

declnie in econ activity iver 2 or more quarters

Question 12

one likely cause of inflation

Answer 12

rise in demand - demand-pull
from falling interest rates

Question 13

falling interest rates =

Answer 13

increase consumption

Question 14

deprecation of exchange rate effect on current account

Answer 14

exports cheaper so increase exports

Question 15

likely reason for trade balance to show increased imports over exports

Answer 15

increase real incomes

appreciation exchange rate

low productivity

Question 16

reason for reduction in total trade deficit

Answer 16

depreciation exchange rate

fall value. of pound makes exports cheaper, imports expensive

Question 17

trade balance

Answer 17

value of exports minus imports

Question 18

current account

Answer 18

net flow of money from trade in goods and services, income, and current transfers

Question 19

how multiplier increases AD

Answer 19

increase oF AD leads to greater impact on final equilibrium
one persons spending is another’s income

Question 20

national income

Answer 20

total spending on goods and services

Question 21

circular flow of income

Answer 21

how money flows around the economy between consumers and firms

Question 22

supply side policy

Answer 22

aim to increase prod potential of an economy

Question 23

market-based

Answer 23

removal of anything preventing free-market system working properly

Question 24

Changes in interest rates: ​An increase in interest rates will be used to decrease inflation. However,

Answer 24

continuously high rates will damage long-term investment as less businesses will want to invest, and this will decrease long-term growth.

Question 25

Expansionary policies will increase AD, to increase output, employment and economic growth but

Answer 25

will lead to increased inflation and may worsen the balance of payments as some of the increased demand for goods and services will be met by imports.