Role of Government in Stabilizing the Economy

Question 1

Define National Income

Answer 1

National Income is a measure of economic activity in an economy over a given period, usually one year.

Question 1

Define National Budget

Answer 1

The national budget is a statement of government’s estimated revenue and expenditure for a country for a the coming year.

Question 2

Define Disposable Income

Answer 2

Disposable income is total personal income minus taxes

Question 3

Define National Debt

Answer 3

National Debt is the sum of the governments borrowed money over the years to finance budget deficits

Question 4

Define Fiscal Policy

Answer 4

Fiscal Policy is the use of government spending and taxation to control aggregate demand in the economy

Question 5

Define Fiscal Deficit

Answer 5

Fiscal Deficit is where expenditure exceeds revenue

Question 6

Define Monetary Policy

Answer 6

Monetary Policy is the use of interest rates and other direct measures to control the money supply and aggregate demand in the economy

Question 7

Define Economic Growth

Answer 7

Economic Growth is the increase in real per capita gdp

Question 8

Define Economic Development

Answer 8

Economic development is a sustainable increase in the quality of life of residents of a developing country

Question 9

Define Developing Economy

Answer 9

A Developing Economy is a country with a low human development index, less growth and poor per capita income

Question 10

Define Developed Economy

Answer 10

A Developed Economy is one with sustained economic growth, security, high per capita income, and advanced technological infrastructure

Question 11

Define Balance of Payments

Answer 11

Balance of Payments is a summary of the payments and receipts of transactions between a country and the rest of the world

Question 12

Define Gross Domestic Product

Answer 12

Gross domestic product is the monetary value of all finished goods and services made within a country during a specific period.

Question 13

Define Gross National Product

Answer 13

Gross National Product (GNP) is the total value of all finished goods and services produced by a country’s citizens in a given financial year.

Question 14

Define Employment

Answer 14

Employment is the state of having paid work

Question 15

Define Unemployment

Answer 15

Unemployment occurs when someone is willing and able to work but does not have a paid job

Question 16

Define Inflation

Answer 16

Inflation is the steady and continuous rise in the general price level

Question 17

Define Deflation

Answer 17

Deflation is a general decline in prices for goods and services

Question 18

Define Savings

Answer 18

Savings are all income that is not consumed

Question 19

Define Investment

Answer 19

Investment is the purchase of capital goods

Question 20

Define Closed Economy

Answer 20

A closed economy that does not engage in international trade

Question 21

Define Open Economy

Answer 21

An open economy is one that engages in international trade