AIGenie Evals 2

• What does Theme 2 of the Edexcel Economics specification cover?

  The UK economy during the economic cycle
• What are the limitations of GDP as an economic indicator?

  • Fails to account for income distribution
  • Ignores non-market activities
  • Overlooks environmental costs of growth
• Why might official unemployment statistics understate the problem?

  They ignore underemployment and discouraged workers
• What does the Consumer Price Index (CPI) measure?

  Price changes of a basket of goods
• What is a potential consequence of increasing aggregate demand?

  It may lead to inflationary pressures
• What constrains short-run aggregate supply (SRAS)?

  Existing production capacity and input availability
• What is necessary for expanding long-run aggregate supply (LRAS)?

  Innovation and skill development
• What is a potential downside of economic growth?

  It may lead to environmental degradation
• What is meant by inclusive growth?

  Growth that addresses income inequality
• What can rapid economic growth lead to?

  Asset bubbles and economic instability
• What are the limitations of the Phillips Curve?

  It can break down due to supply shocks
• What happens if unemployment is reduced below its natural rate?

  It may lead to inflationary pressures
• Why is anchoring inflation expectations important?

  It maintains price stability
• What does a persistent current account deficit indicate?

  Competitiveness issues and reliance on foreign capital
• What can exchange rate depreciation improve?

  Trade balances
• What is a risk of global interdependence?

  External shocks can impact domestic performance
• What are the key challenges for policymakers in managing the UK economy?

  • Monitoring economic performance
  • Balancing growth and stability
  • Addressing income inequality
  • Managing inflation and unemployment