Other

Question 1

Net trade definition

Answer 1

The difference in value between a country’s exports of goods and services and its imports
Exports-imports

Question 2

Net immigration definition

Answer 2

The amount by which the number of immigrants (= people arriving to live in a country) is greater than the number of emigrants (= people leaving).

Question 3

Interest rate definition

Answer 3

PRICE OF MONEY-

Annual percentage paid to free borrow of money

Question 4

Characteristics of a recession

Answer 4

• Fall in inflation due to reduction in consumer expenditure
• Rising unemployment due to less demand for workers due to falling real output
• Falling profits/ investment- higher level of business failure
• Increasing budget deficit due to rise in government spending/ fall in tax revenues

Question 5

Factors that the MPC at Bank of England consider when reducing the base rate

Answer 5

• Confidence can indicate changes turning points in business cycle
• House prices- decide household wealth, which translates to borrowing/spending
• Growth rate and spare capacity- ensure that AD grows in line with productive potential

Question 6

National income definition

Answer 6

Total spending on goods and services in economy

Question 7

Circular flow of income definition

Answer 7

Money flows around the economy between consumers/households and firms- DIAGRAM

Question 8

Purchasing power parity definition

Answer 8

The rate at which the currency of one country would have to be converted into that of another country to buy the same amount of goods and services in each country.
Takes into account costs of living to compare different countries

Question 9

Reasons for reduction in trade deficit?

Answer 9

• Falling commodity prices e.g. oil - reduces costs of imports
• Lower UK inflation- exports become more competitive
• Improvement in quality of UK exports increases demand for them
• Depreciation of exchange rate-
  fall in value in pound makes exports cheaper and imports more expensive

Question 10

Reasons for change in consumer confidence

Answer 10

• Falling unemployment
• Lower inflation
• Rising income/growth- leads to more job security

Question 11

Marginal Propensity to consume definition

Answer 11

Change in consumption/ change in income

The proportion of one additional unit of income that is spent