Edexcel A-Level Economics Theme 2 Already Passed

Injections {Ans: In the circular flow of income, spending which is not generated by households including investment, government spending and exports.}Budget deficit {Ans: A deficit which arises because government spending is greater than its receipts. Government therefore has to borrow money to finance the difference.}Inflation {Ans: A general rise in prices.}Contractionary monetary policy {Ans: Monetary policy which leads to a fall in aggregate demand.}Marginal propensity to save (MPS) {Ans: The increase in saving divided by the increase in income that caused it (i.e. change in S / change in Y)}Retail Prices Index (RPI) {Ans: A measure of the price level which has been calculated in the UK for over 60 years and is used in a variety of contexts such as by the government to index welfare benefits.}Underemployed {Ans: Those who would work more hours if available or are in jobs which are below their skill level.}Aggregate demand {Ans: The total of all demands or expenditures in the economy at any given price.}Aggregate supply curve {Ans: The relationship between the average level of prices in the economy and the level of total output.}Supply-side economics {Ans: The study of how changes