Edev Mid 4

Question 1

increase in the production of economic goods and services, compared from one period of time to another

Answer 1

Economic growth

Question 2

It can be measured in nominal or real (adjusted for inflation) terms. Traditionally, aggregate economic growth is measured in terms of gross national product (GNP) or gross domestic product (GDP), although alternative metrics are sometimes used.

Answer 2

Economic growth

Question 3

refers to an increase in aggregate production in an economy. Often, but not necessarily, aggregate gains in production correlate with increased average marginal productivity. That leads to an increase in incomes, inspiring consumers to open up their wallets and buy more, which means a higher material quality of life or standard of living.

Answer 3

Economic growth

Question 4

refers to an increase in aggregate production in an economy. Often, but not necessarily, aggregate gains in production correlate with increased average marginal productivity. That leads to an increase in incomes, inspiring consumers to open up their wallets and buy more, which means a higher material quality of life or standard of living.

Answer 4

Growth

Question 5

economic output

Answer 5

depends on factors, such as capital goods, labor force, technological advancements, and human capital.

Question 6

latter deals with the efficacy of measures used to balance an economy’s social, economic, and political framework.

Answer 6

economic development

Question 7

higher income, reduced poverty, better facilities, and improved quality of life.

Answer 7

economic expansion

Question 8

increases state capacity and the supply of public goods. Growth creates wealth, some of which goes directly into the pockets of employers and workers, improving their wellbeing. As people earn higher incomes and spend more money, this enables people to exit poverty and gain improved living standards.

Answer 8

Economic growth

Question 9

from increased consumption and financial activity

Answer 9

Determinants of Economic Growth

Question 10

Determinants of Economic Growth

Answer 10

1. Physical Capital Goods
2. Technological Improvement
3. Labor Force
4. Human Capital

Question 11

Increasing the amount of physical capital, such as machinery, equipment, factories, etc., in an economy raises labor productivity.

Answer 11

1. Physical Capital Goods

Question 12

The increased adoption of sophisticated technology leads to efficient and cost-effective production. Furthermore, businesses can produce greater output with the same amount of physical capital.

Answer 12

2. Technological Improvement

Question 13

When all other factors remain constant, more workers participate in the productivity of economic goods and services.

Answer 13

3. Labor Force

Question 14

Providing skilled laborers with training or hiring experienced workers boosts their productivity.

Answer 14

4. Human Capital

Question 15

refers to economy-wide fluctuations in production, trade, and general economic activity.

Answer 15

business cycle

Question 16

From a conceptual perspective, the ____________ is the upward and downward movements of levels of GDP (gross domestic product) and refers to the period of expansions and contractions in the level of economic activities (business fluctuations) around a long-term growth trend.

Answer 16

business cycle

Question 17

STAGES OF THE BUSINESS CYCLE

Answer 17

EXPANSION
PEAK
RECESSION
DEPRESSION
TROUGH
RECOVERY

Question 18

In this stage, there is an increase in positive economic indicators such as employment, income, output, wages, profits, demand, and supply of goods and services.

Answer 18

EXPANSION

Question 19

Debtors are generally paying their debts on time, the velocity of the money supply is high, and investment is high. This process continues as long as economic conditions are favorable for expansion.

Answer 19

EXPANSION

Question 20

The maximum limit of growth is attained. The economic indicators do not grow further and are at their highest. Prices are at their peak. This stage marks the reversal point in the trend of economic growth. Consumers tend to restructure their budgets at this point.

Answer 20

PEAK

Question 21

stage that follows the peak phase. The demand for goods and services starts declining rapidly and steadily in this phase. Producers do not notice the decrease in demand instantly and go on producing, which creates a situation of excess supply in the market. Prices tend to fall. All positive economic indicators such as income, output, wages, etc., consequently start to fall.

Answer 21

RECESSION

Question 22

There is a commensurate rise in unemployment. The growth in the economy continues to decline, and as this falls below the steady growth line, the stage is called a depression.

Answer 22

DEPRESSION

Question 23

there is a turnaround in the economy, and it begins to recover from the negative growth rate. Demand starts to pick up due to low prices and, consequently, supply begins to increase.

Answer 23

RECOVERY

Question 24

It is the negative saturation point for an economy. There is extensive depletion of national income and expenditure.

Answer 24

TROUGH

Question 25

The population develops a positive attitude towards investment and employment and production starts increasing. Employment begins to rise and, due to accumulated cash balances with the bankers, lending also shows positive signals. In this phase, depreciated capital is replaced, leading to new investments in the production process.

Answer 25

RECOVERY

Question 26

UNEMPLOYMENT

Answer 26

UNEMPLOYMENT

Question 27

referring to individuals who are employable and actively seeking a job but are unable to find a job. Included in this group are those people in the workforce who are working but do not have an appropriate job.

Answer 27

UNEMPLOYMENT

Question 28

unable to find a job. Included in this group are those people in the workforce who are working but do not have an appropriate job.

Answer 28

UNEMPLOYMENT

Question 29

the biggest cause of unemployment that typically happens during a recession. When companies experience a reduction in the demand for their products or services, they respond by cutting back on their production, making it necessary to reduce their workforce within the organization. In effect, workers are laid off.

Answer 29

1. Demand deficient unemployment

Question 30

TYPES OF UNEMPLOYMENT

Answer 30

1. Demand deficient unemployment 2. Frictional unemployment 3. Structural unemployment 4. Voluntary unemployment

Question 31

workers who are in between jobs. An example is a worker who recently quit or was fired and is looking for a job in an economy that is not experiencing a recession. It is not an unhealthy thing because it is usually caused by workers trying to find a job that is most suitable to their skills.

Answer 31

2. Frictional unemployment

Question 32

happens when the skills set of a worker does not match the skills demanded by the jobs available, or alternatively when workers are available but are unable to reach the geographical location of the jobs.

Answer 32

3. Structural unemployment

Question 33

It happens when a worker decides to leave a job because it is no longer financially compelling. An example is a worker whose take-home pay is less than his or her cost of living.

Answer 33

4. Voluntary unemployment

Question 34

caused by various reasons that come from both the demand side, or employer, and the supply side, or the worker.

Answer 34

Unemployment

Question 35

caused by high interest rates, global recession, and financial crisis. From the supply side, frictional unemployment and structural employment play a great role.

Answer 35

Demand-side reductions

Question 36

The impact of unemployment can be felt by both the

Answer 36

workers and the national economy

Question 37

causes workers to suffer financial hardship that impacts families, relationships, and communities. When it happens, consumer spending, which is one of an economy’s key drivers of growth, goes down, leading to a recession or even a depression when left unaddressed.

Answer 37

Unemployment

Question 38

results in reduced demand, consumption, and buying power, which in turn causes lower profits for businesses and leads to budget cuts and workforce reductions. It creates a cycle that goes on and on that is difficult to reverse without some type of intervention. The indicators of a country’s economic status.

Answer 38

Unemployment

Question 39

decline of purchasing power of a given currency over time. A quantitative estimate of the rate at which the decline in purchasing power occurs can be reflected in the increase of an average price level of a basket of selected goods and services in an economy over some period of time.

Answer 39

INFLATION

Question 40

measure of the rate of rising prices of goods and services in an economy. It can occur when prices rise due to increases in production costs, such as raw materials and wages. A surge in demand for products and services can cause inflation as consumers are willing to pay more for the product.

Answer 40

INFLATION

Question 41

begins with a shortage of service or product, leading to businesses increasing their prices and overall costs of the product. This upward price adjustment triggers a cycle of rising costs, in the process making it harder for businesses to reach their margins and profitability over time.

Answer 41

INFLATION

Question 42

DIFFERENT TYPES OF INFLATION

Answer 42

Creeping Inflation Galloping Inflation Hyperinflation Stagflation Deflation

Question 43

also known as mild inflation or moderate inflation. This type of inflation occurs when the price level persistently rises over a period of time at a mild rate. When the rate of inflation is less than 10 per cent annually, or it is a single digit inflation rate, it is considered to be a moderate inflation.

Answer 43

Creeping Inflation

Question 44

If mild inflation is not checked and if it is uncontrollable, it may assume the character of ________. Inflation in the double or triple digit range of 20, 100 or 200 percent a year. Many Latin American countries such as Argentina, Brazil had inflation rates of 50 to 700 percent per year in the 1970s and 1980s.

Answer 44

Galloping Inflation

Question 45

: It is a stage of very high rate of inflation. While economies seem to survive under galloping inflation, a third and deadly strain takes hold when the cancer of hyperinflation strikes. Nothing good can be said about a market economy in which prices are rising a million or even a trillion percent per year . Hyperinflation occurs when the prices go out of control and the monetary authorities are unable to impose any check on it. Germany had witnessed hyperinflation in 1920’s.

Answer 45

Hyperinflation

Question 46

It is an economic situation in which inflation and economic stagnation or recession occur simultaneously and remain unchecked for a period of time. _________ was witnessed by developed countries in 1970s, when world oil prices rose dramatically.

Answer 46

Stagflation

Question 47

the reverse of inflation. It refers to a sustained decline in the price level of goods and services. It occurs when the annual inflation rate falls below zero percent (a negative inflation rate), resulting in an increase in the real value of money. Japan suffered from ________ for almost a decade in 1990s.

Answer 47

Deflation

Question 48

3 CAUSES OF INFLATION

Answer 48

Demand-pull Inflation Cost-push Inflation Built-in Inflation

Question 49

It occurs when the demand for goods or services is higher when compared to the production capacity. The difference between demand and supply (shortage) result in price appreciation.

Answer 49

Demand-pull Inflation

Question 50

: It occurs when the cost of production increases. Increase in prices of the inputs (labour, raw materials, etc.) increases the price of the product.

Answer 50

Cost-push Inflation

Question 51

Expectation of future inflations results in __________. A rise in prices results in higher wages to afford the increased cost of living. Therefore, high wages result in increased cost of production, which in turn has an impact on product pricing. The circle hence continues.

Answer 51

Built-in Inflation