Economics

Question 1

What is economic growth?

Answer 1

When there is an increase in the production (real value) of goods and services within an economy from one year to the next.

Question 2

A recession is caused by what?

Answer 2

Three or more quarters of negative growth.

Question 3

What is the formula for GDP per Capita?

Answer 3

GDP/population

Question 4

What is real GDP?

Answer 4

Real GDP is adjusted for inflation, whilst GDP is not.

Question 5

What is inflation?

Answer 5

It is when the price of Goods and Services rise usually due to economic growth.

Question 6

What is the definition of sustainable development?

Answer 6

Development that meets the needs of the present without compromising the meeting of needs in the future.

Question 7

What is the definition of living standards?

Answer 7

Consists of material and non-material standards.
Material are created through a higher salary and ability to buy more goods and services through steady and strong economic growth.
Non-Material consist of increasing happiness in people’s life through aspects related to happiness such as, protecting the environment, more leisure, happiness, job satisfaction and freedom.

Question 8

What is the indicator of growth rate in national production?

Answer 8

Percentage change in GDP.

Question 9

Define expansion in terms of economic growth.

Answer 9

GDP: Rising
Inflation: Rising
Unemployment: Falling
Spending/Output: Rising

Question 10

Define peak/boom in terms of economic growth.

Answer 10

GDP: At/near productive capacity
Inflation: Very high
Unemployment: Very low
Spending/Output: Very high

Question 11

Define contraction in terms of economic growth.

Answer 11

GDP: Slowing down/falling
Inflation: Falling
Unemployment: Rising
Spending/Output: Falling

Question 12

Define trough in terms of economic growth.

Answer 12

GDP: low/ negative growth rate
Inflation: Very low
Unemployment: Very high
Spending/Output: Very low

Question 13

What are the benefits and costs of economic growth to employment?

Answer 13

Benefit: Employment rises due to company’s expanding and working to their capacity.
Cost: Structural employment can replace workers due to efficiency and cost.

Question 14

What are the benefits and costs of economic growth to personal income?

Answer 14

Benefit: Strong Economic growth helps raise personal income.
Cost: The income isn’t evenly distributed

Question 15

What are the benefits and costs of economic growth to International trade?

Answer 15

Benefit: Exports>Imports and the economy obtains a surplus.
Cost: Imports>Exports and the economy obtains a deficit.

Question 16

What are the benefits and costs of economic growth to Living standards?

Answer 16

Benefit: In material Ls; More availability and variety of goods and services such as food, clothes, TVs, medicine etc
In non-material Ls; Quality of life improves, increased life expectancy.

Cost:
In material Ls; Unequal distribution of goods and services.
In non-material Ls; Environmental damage, resource depletion ect.

Question 17

Name the:

• Current economic growth rate
• Current annual inflation rate
• Unemployment rate

Answer 17

2. 3%
3. 5% - low
4. 3%

Question 18

How could the government promote economic growth?

Answer 18

Macro-Economic Policies: Monetary and Budgetary Policies
And
Micro-Economic Policies: Cutting tax rates in specific areas etc

Question 19

How could the government promote economic growth?

Answer 19

Macro-Economic Policies: Monetary and Budgetary Policies
And
Micro-Economic Policies: Cutting tax rates in specific areas etc