Year 10 Economics

Question 1

What is Gross Domestic Product (GDP)?

Answer 1

the total value of all goods and services created in an economy

Question 2

What is Gross National Product (GNP)?

Answer 2

the total value of all finished goods and services produced by a country’s citizens in a given financial year

Question 3

What is Gross Domestic Product Per Capita?

Answer 3

the countries GDP divided by the population. the economic output per person.

Question 4

What is Inflation Rate?

Answer 4

Inflation is the rise of prices of goods and services in an economy whilst also decreasing the purchasing power of consumers. Inflation measures the rate of change of these prices.

Question 5

What is Unemployment Rate?

Answer 5

the percentage of the total labour force that is unemployed but actively seeking employment and willing to work.

Question 6

What is Underemployment?

Answer 6

a measure of employment and labor utilization in the economy that looks at how well the labor force is being utilized in terms of skills, experience and availability to work. It refers to a situation in which individuals are forced to work in low paying or low skill jobs.

Question 7

What is the Human Development Index (HDI)?

Answer 7

a statistic composite index of life expectancy, education, and per capita income indicators is used to rank countries into four tiers of human development.

Question 8

Opportunity cost

Answer 8

The cost of choosing one option over another

Question 9

What is the difference between unemployment and underemployment?

Answer 9

Unemployed means you don’t have a job, while underemployment means the job you have is inadequate.

Question 10

Opportunity cost?

Answer 10

The cost of choosing one option over another

Question 11

Why is GDP a flawed economic indicator?

Answer 11

• Does not account for the distribution of income
• An estimate
• Does not adjust to environmental factors.

Question 12

Does a nation with a high GDP always have a high standard of living?

Answer 12

No. Because the standard of living is calculated by the GDP per capita. If a country has a high GDP but also has a large population then when the GDP is divided to get the GDP per capita, the number will be lower than some other nations with a not-so-high GDP but also not a large population. For example, China has a much higher GDP than Australia but also has a larger population than Australia, so the GDP per capita is actually lower than Australia’s. Therefore, china with a higher GDP actually has a lower standard of living.

Question 13

Why are intermediate goods not counted in GDP?

Answer 13

Intermediate goods are not counted as a part of a nation’s GDP because GDP counts the total value of all FINAL goods and services. Those intermediate goods would get counted twice. So if a confectioner buys sugar to add it to her candy, it can only be counted once—when the candy is sold, rather than when she buys the sugar for production. This is called a value-added approach because it values every stage of production involved in producing a final good.

Question 14

What is participation rate?

Answer 14

the total number of people or individuals who are currently employed or in search of a job.

Question 15

What are the 5 types of unemployment?

Answer 15

Frictional, Structural, Cyclical, Seasonal and Technological

Question 16

What is frictional unemployment?

Answer 16

when workers change jobs and are unemployed while waiting for a new job. A worker may already have a job lined up, but they may not be able to start for a few months.

Question 17

What is structural unemployment

Answer 17

when economical shifts reduce the need for workers. If the economy is not doing very well, that means you’re not going to need as many workers.

Question 18

What is cyclical unemployment

Answer 18

when natural business cycles bring about a loss of jobs. It’s not always easy to predict, but economies do tend to go through fluctuations. When the economy dips down, and there isn’t much work, and there aren’t as many products being purchased, people aren’t buying as much, then the economy is set to go into a recession.

Question 19

What is structural unemployment?

Answer 19

when economical shifts reduce the need for workers. If the economy is not doing very well, that means you’re not going to need as many workers.

Question 20

What is cyclical unemployment?

Answer 20

when natural business cycles bring about a loss of jobs. It’s not always easy to predict, but economies do tend to go through fluctuations. When the economy dips down, and there isn’t much work, and there aren’t as many products being purchased, people aren’t buying as much, then the economy is set to go into a recession.

Question 21

What is seasonal unemployment?

Answer 21

when seasonal cycles reduce the need for certain jobs. Seasonal unemployment could be people that maybe work in a farming or ranching community. There are certain times of the year when you’re going to be harvesting, certain times of the year when you’re going to be planting, and certain times of the year when it is going to be waiting for things to happen.

Question 22

What is technological unemployment?

Answer 22

When advances in technology result an elimination of certain jobs. Going with telephones, you had telephone operators.

Question 23

What is living standards?

Answer 23

the material well being of the average person in a given population. It is typically measured using gross domestic product (GDP) per capita.

Question 24

What are 2 ways nations can improve the productivity of their workers?

Answer 24

Increase the skills of workers and enhance the competition.

Question 25

What is the difference between a developed nation and a developing nation?

Answer 25

Developed nations are generally categorized as countries that are more industrialized and have higher per capita income levels. Developing nations are generally categorized as countries that are less industrialized and have lower per capita income levels.

Question 26

What is the economic problem?

Answer 26

there are unlimited wants but a limited amount of resources to satisfy those wants.

Question 27

Expenditure definition

Answer 27

the act of spending

Question 28

What is the Fiscal policy?

Answer 28

the use of government revenue collection and expenditure to influence a country’s economy.

Question 29

Monetary Policy

Answer 29

monetary policy involves using interest rates to influence aggregate demand, employment and inflation in the economy. It is one of the main economic policies used to stabilise business cycles.

Question 30

What is the Gini coefficient?

Answer 30

a statistical measure of the degree of variation represented in a set of values, used especially in analyzing income inequality.

Question 31

What is a Monetary Policy?

Answer 31

monetary policy involves using interest rates to influence aggregate demand, employment and inflation in the economy. It is one of the main economic policies used to stabilise business cycles.

Question 32

What is the cash rate?

Answer 32

the interest rate that a central bank – such as the Reserve Bank of Australia or Federal reserve – will charge commercial banks for loans. The cash rate is also known as the bank rate or the base interest rate.

Question 33

What is the economic role of the government?

Answer 33

The government:

(1) provides the legal and social framework within which the economy operates
(2) maintains competition in the marketplace
(3) provides public goods and services
(4) redistributes income
(5) corrects for externalities
(6) takes certain actions to stabilize the economy.

Question 34

What is the impact of economic inequality?

Answer 34

At a microeconomic level, inequality increases ill health and health spending and reduces the educational performance of the poor. These two factors lead to a reduction in the productive potential of the work force. At a macroeconomic level, inequality can be a brake on growth and can lead to instability.

Question 35

What is the poverty trap?

Answer 35

when government-support payments for the poor decline as the poor earn more income. As a result, the poor do not end up with much more income when they work, because the loss of government support largely or completely offsets any income that is earned by working.

Question 36

Why is there a difference in distribution of income?

Answer 36

gender, ethnicity, geographical location, occupation/education, historical income

Question 37

What is the Consumer Price Index (CPI)?

Answer 37

a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them.

Question 38

What is Demand-Pull Inflation?

Answer 38

When the aggregate demand in an economy strongly outweighs the aggregate supply, prices go up. It involves inflation rising as real gross domestic product rises and unemployment falls. “too much money chasing too few goods.”

Question 39

What is Cost-Push Inflation?

Answer 39

when overall prices increase (inflation) due to increases in the cost of wages and raw materials

Question 40

What are Externalities?

Answer 40

a cost or benefit that is imposed on a third party who did not agree to incur that cost or benefit.

Question 41

Leakage

Answer 41

Any money that is not being spent on goods and services

• savings
• taxation
• imports

Question 42

Injection

Answer 42

Money that is spent on goods and services

• investments
• exports