In Economics, what is an interest rate?

• The amount a borrower charges a lender.

• The total cost of a loan including fees.

• The amount a lender charges a borrower.

• A government-set percentage on all financial transactions.

Answer explanation

An interest rate is the amount a lender charges a borrower for the use of borrowed money, typically expressed as a percentage of the loan amount. This distinguishes it from other options that do not accurately define interest rates.

According to Economics, an interest rate can also apply to:

• The fees charged for bank services.

• The amount earned at a bank or credit union from a savings account.

• Government taxes on financial transactions.

• The price of stocks and shares.

Answer explanation

Interest rates apply to the amount earned from savings accounts, as they represent the cost of borrowing or the return on savings. The other options do not directly relate to interest rates.

When writing an extended response in Economics. What is the first step mentioned before you begin writing?

• Analyse the data accurately.

• Interpret the data correctly.

• Read the question accurately.

• Create a detailed plan.

Answer explanation

The first step in writing an extended response in Economics is to read the question accurately. This ensures you understand what is being asked before proceeding with analysis and interpretation.

"Economic Systems", an economy that relies on customs and history is likely a:

• Command economy.

• Free market economy.

• Traditional economy.

• Mixed market economy.

Answer explanation

A traditional economy is based on customs and history, relying on established practices for production and distribution. This distinguishes it from command, free market, and mixed economies, which operate differently.

"Economic Systems", in a free market economy - how are prices typically determined?

• By the government.

• Based on long-standing traditions.

• Through negotiation between buyers and sellers.

• Price mechanism system (i.e. supply and demand).

Answer explanation

In a free market economy, prices are determined through negotiation between buyers and sellers, influenced by the price mechanism of supply and demand, ensuring that market forces dictate price levels.

"Economic Systems" indicates that in a command economy, who decides on all economic activities?

• Private businesses.

• Consumers.

• Government.

• Local councils.

Answer explanation

In a command economy, the government makes all decisions regarding economic activities, including production and distribution, unlike private businesses or consumers who operate in market economies.

"Economic Systems", what is highlighted as the biggest difference between the 4 types of economies?

• The level of technological advancement.

• The amount of international trade.

• The size of the population.

• The amount of government intervention.

Answer explanation

The biggest difference between the four types of economies is the amount of government intervention. This determines how much the government controls economic activities, influencing overall economic structure and function.

According to the "Five Sector Circular Flow" , "Four Sector Circular Flow" and "Three Sector Circular Flow", which of the following is an example of government spending (G)?

• Goods and services tax.

• Personal income tax.

• Healthcare.

• Savings.

Answer explanation

Healthcare is an example of government spending (G) as it involves government expenditure on public health services, unlike taxes or savings which do not represent direct spending.

"Five Sector Circular Flow" , "Four Sector Circular Flow" and "Three Sector Circular Flow", which of the following is an example of taxation (T)?

• Defence

• Investment

• Goods and services tax

• Exports

Answer explanation

The Goods and Services Tax (GST) is a form of taxation imposed on the supply of goods and services, making it the correct choice. Defence and exports are not taxes, while investment refers to capital expenditure.

"Five Sector Circular Flow" , "Four Sector Circular Flow" , and the "Three Sector Circular Flow", taxation is classified as a:

• Injection

• Flow

• Leakage

• Expenditure

Answer explanation

Taxation is considered a leakage in the circular flow model because it represents money that is taken out of the economy, reducing the overall flow of income and expenditure among the sectors.