Economics Test 2

Question 1

Economic growth/GDP

Answer 1

The ability for a nation to satisfy the wants of its people over time

Question 2

Law of demand

Answer 2

The inverse relationship between price and quantity demanded

Question 3

Non price factors affecting demand

Answer 3

Price of substitute good
Price of complementary good
Advertising and media
Income 
Population

Question 4

Law of supply

Answer 4

The positive relationship between price and quantity supplied

Question 5

Non price factors affecting supply

Answer 5

Technology
Price of resources
Season

Question 6

Market Equilibrium

Answer 6

When both the consumer and producer are happy with a price point and production point to exchange

Question 7

Surplus

Answer 7

Too much supply for quantity demanded

Question 8

Shortage

Answer 8

To much demand for quantity supplied

Question 9

What does economic growth measure

Answer 9

The performance of a countries economy

Question 10

How to calculate nominal GDP

Answer 10

Price of good X quantity = value of output

Question 11

How to calculate GDP growth rate

Answer 11

(GDP(year 2) - GDP (year 1) divided by GDP(year 1) X 100

Question 12

How to calculate GDP per capita

Answer 12

GDP divided by Population

Question 13

Target Rate of GDP

Answer 13

3-4%

Question 14

Benefites of economic growth

Answer 14

People are able to satisfy more wants

A nation is able to produce more goods

Question 15

Limitations of economic growth

Answer 15

Does not take into account any economic activity that is not paid for
Does not take into account damage to the environment
Does not consider value judgements

Question 16

Demand Causes of Economic growth

Answer 16

Rise in consumer spending
Rise in business spending
Higher government spending

Question 17

Supply causes of economic growth

Answer 17

Immigration

Rise in productivity

Question 18

Alternative measures of GDP

Answer 18

Happy planet index

Social progress indicator