7 - Economic Change

Question 1

What Is GDP?
(2 Points)

Answer 1

~ Measure of the value of output in the economy.

~ Measurement of economic growth.

~ Varies depending on the state of the economic cycle.

Question 2

What Is GDPs Relationship With Income?

Answer 2

As GDP increases, incomes increase. Vice versa.

Question 3

What Does The Business Cycle Look Like?

Answer 3

Question 4

What Causes The Business Cycle To Fluctuate?
(3 Points)

Answer 4

~ Changes in the level of business and consumer confidence.

~ Changes in the value of consumer spending and business investment.

~ Changes in government policy, which can introduce a change in the economy.

Question 5

What Affects The Level Of Economic Economy?

Answer 5

External shocks to the economy.

Question 6

Why Is It Important For An Economy To Maintain Positive Economic Growth?
(4 Points)

Answer 6

~ Price stability.

~ Growth of real GDP.

~ Falling unemployment.

~ There are high average living standards.

Question 7

What Are The Features Of A Boom?
(4 Points)

Answer 7

~ High level of business and consumer confidence.

~ More investment and consumption, increasing profits.

~ Prices rises due to more spending.

~ Low unemployment due to large demand for goods and services.

Question 8

What Are The Features Of A Recession?
(3 Points)

Answer 8

~ Falling levels of consumer and business confidence.

~ Less investment and consumption, lowering profits.

~ Unemployment rises, as businesses cannot cover their costs.

Question 9

What Are The Features Of A Slump?
(4 Points)

Answer 9

~ Weak consumer and business confidence.

~ Little to no investment or consumption, very low profits.

~ Rapidly rising unemployment.

~ Prices may start to fall.

Question 10

What Are The Features Of A Recovery?
(3 Points)

Answer 10

~ Increasing consumer and business confidence.

~ Little increases in spending and investment, due to speculation of economy receding.

~ Unemployment slowly falls.