Chapter 2: Flashcards
Decrease the capacity of an economy to produce goods and services compared from one period of time to another.
Low Economic Growth
Indicators of Economic Growth
- Unemployment
- Poverty Incidents
- Law of supply and demand
- Inflation
- High Interest Rate
- GDP (Gross Domestic Product)
- Foreign Exhange
Majority of the working population are unemplyed
Unemployment
worker is employed but not in the desired capacity whether in terms of compensation, working hours, or skills level and work experience.
Underemployment
Number of households having an income below the poverty threshold.
Poverty Incidents
Income needed to sustain food and non-food needs of the household
Poverty Threshold
Perhaps one of the most fundamental concepts of economics and it is the backbone of a market
Law of supply and demand
How much of a product or service is desired by buyers.
Demand
Amount of product people are willing to buy at a certain price
Quantity Demanded
Relationship between price and quantity demanded
Demand relationship
Represents how much the market can offer
Supply
Amount of a certain goods producers are willing to supply when receiving a certain price.
Quantity Supplied
Perhaps one of the most fundamental concepts of economics and it is the backbone of a market economy.
Supply and demand
The correlation between the price and how much goods or service is supplied to the market.
Supply relationship
It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.
GDP
The monetary value of all the finished goods and services produced within a country’s borders in a specific time period. It is usually calculated on an annual basis.
GDP
The rate at which the general led prices for goods and services is rising and subsequently purchasing power of the peso falls
Inflation
A rate which is charged or paid for the use of money.
High Interest Rates
Often expressed as an annual percentage of the principal
Interest Rate
True or False
High rates increase loan costs, dissuading borrowing and saving. Existing borrowers have less disposable income; therefore, other areas of consumption will fall.
True
True or False
higher interest rates will tend to increase consumer spending and investment.
False
higher interest rates will tend to reduce consumer spending and investment.
True or False
A rise in interest rates encourages investment; it makes firms and consumers more willing to take out risky investments and purchases.
False
A rise in interest rates discourages investment; it makes firms and consumers less willing to take out risky investments and purchases.
True or False
Increased rates elevate mortgage costs, reducing consumer spending. Even slight hikes can significantly impact personal finances and decrease overall expenditure.
True
True or False
Higher interest rates make it more attractive to save in a deposit account because of the interest gained from saving.
True
True or False
Higher interest rates decrease the cost of government interest payments. This could lead to lower taxes in the future.
False
Higher interest rates increase the cost of government interest payments. This could lead to higher taxes in the future.
True or False
High rates attract savings domestically, bolstering the local currency. A stronger currency reduces export competitiveness and boosts import demand.
True
Is the value of it’s currency in the international market.
Foreign Exchange
True or False
If the price of exports rises by a smaller rate than that of its imports, the currency’s value will decrease in relation to its trading partners.
True
True or False
If the price of a country’s exports rises by a greater rate than that of its imports, its terms of trade have favorably improved.
True
Make’s country’s exports more Expensive and Imports cheaper in foreign markets
Higher Currency
Make’s country’s exports more cheaper and Imports expensive in foreign markets
Lower Currency
Lower Country’s Balance of trade; Increasing Country’s Balance of trade
Higher Exchange rate; Lower exchange rate
What causes an Unemployment
- Low economic activities
- Mismatch in education and training to the real manpower requirements
- Over qualification, under qualification, under skilled.
- Lack or poor training programs.
- Lack of support services such as childcare and public transportation.
Higher Country’s Balance of trade
Lower Exchange rate