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Question 1

Which are the elements of the business cycle?

Answer 1

Growth, peak, recession, depression.

Question 2

Which is the formula for GDP?

Answer 2

Y = C + I + G + (x - m )
Y: GDP
C: consumption
I: investment
G: government expenditure
X: exports
M: imports
(x -m): net export

Question 3

Which are the three methods to measure the GDP?

Answer 3

Output, Income, Expenditure method

Question 4

Which are the economic goals?

Answer 4

Equitable distribution of income, Stable rate of inflation, Economic growth, Favorable balance of payments, Low unemployment,

Question 5

Explain the output method

Answer 5

Market value of all final goods and services

You only take into consideration the final product per firm

Question 6

Explain the income method

Answer 6

All the income earned by the factors of production

Question 7

Explain the expenditure method

Answer 7

Adds all the spending to buy final goods and services produced in a country over a period of time

Question 8

Mention the leakages in an economy

Answer 8

Imports, Taxes, Savings

Question 9

Mention the injections in an economy

Answer 9

Government expenditure, Investment, Exports

Question 10

What is the GNI?

Answer 10

GDP + net income from abroad

Question 11

What is the nominal GDP?

Answer 11

only concerns current values at current prices

Question 12

What is the real GDP?

Answer 12

Is adjusted to the base year

Question 13

What is AD?

Answer 13

The total spending for G & S in country, and shows the relationship between the average PL and the real output (GDP)

Question 14

What causes a movement along the AD curve?

Answer 14

Wealth effect, Interest rate, The international trade

Question 15

What causes a shift in AD?

Answer 15

Change in the income
Changes in interest rates (I)
Changes in wealth
Changes in expectations/consumer confidence.
Interest rate: lower interest more you can to ask to invest.
Technological change if you want to be competitive you have to invest in technology.

Question 16

What is SRAS?

Answer 16

Total quantity of goods & services produced in an economy (real GDP) over a particular period of time at different price levels.

Question 17

Which are the 4 types of unemployment?

Answer 17

Structural, Fictional, Seasonal, Cyclical

Question 18

Explain structural unemployment?

Answer 18

Changes in the demand for particular labor-skills

Question 19

Explain frictional unemployment?

Answer 19

Occurs when people are between jobs

Question 20

Explain seasonal unemployment?

Answer 20

When demand for laboring certain industries changes on a seasonal basis

Question 21

Explain cyclical unemployment?

Answer 21

When the economy is in a recession

Question 22

Which are some solutions for frictional unemployment?

Answer 22

Gov. reduce unemployment benefits/ Improve information on available jobs.

Question 23

Which are some solutions for cyclical unemployment?

Answer 23

Expansionary policy

Question 24

Which are some solutions for seasonal unemployment?

Answer 24

Improve information for jobs in the off seasons, give grants to encourage the work of industries in different seasons

Question 25

Which are some solutions for structural unemployment?

Answer 25

Provide education that makes people more flexible, give subsidies to give training to their employees.

Question 26

What is inflation?

Answer 26

Persistent increase in the average price level, fall in a purchasing power

Question 27

How is inflation measured?

Answer 27

Through the consumer price index (CPI)

Question 28

Which are some consequences of inflation?

Answer 28

Loss of purchasing power Uncertainty Labor unrest

Question 29

What is deflation?

Answer 29

Persistent fall in the average level of prives in the economy

Question 30

What is disinflation?

Answer 30

Refer to a falling, but still positive rate of inflation

Question 31

What is the function of automatic stabilizers?

Answer 31

They are for making smaller the inflationary and deflationary gaps

Question 32

What are two examples of automatic stabilizers?

Answer 32

Progressive taxes | Unemployment benefits

Question 33

What is a fiscal policy?

Answer 33

Manipulation of the gov. of its own expenditure & taxes to influence the level of AD.

Question 34

What is Demand pull inflation?

Answer 34

Occurs as a result of increasing AD in the economy | Associated with a booming economy

Question 35

What is Cost-push inflation?

Answer 35

Occurs as a result of an increase in the costs of production

Question 36

What is good deflation?

Answer 36

Prices fall for improvement in productivity

Question 37

What is bad deflation?

Answer 37

Thinking money supply