Applied Economics Overview

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to Lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

Which of the following is NOT a solution for unemployment?

  • Appropriate economic policies for labor-intensive industries
  • Minimize rural-urban migration by improving the economic environment in rural areas
  • Increase government spending to create more jobs (correct)
  • Improve the educational system, especially in rural areas

Inflation is a decrease in the purchasing power of money.

True (A)

What is one way to solve income inequality?

Progressive taxation

One solution to inflation is for central banks to ______ interest rates.

<p>raise</p> Signup and view all the answers

Match the economic problem with its corresponding solution:

<p>Unemployment = Raise interest rates Inflation = Provide more investment opportunities Income inequality = Implement progressive taxation Rural-urban migration = Improve rural economic opportunities</p> Signup and view all the answers

Which of the following is NOT a common cause of income inequality?

<p>Government subsidies for all citizens (D)</p> Signup and view all the answers

Rapidly increasing prices of commodities can negatively affect the purchasing power of consumers.

<p>True (A)</p> Signup and view all the answers

What is one way companies can contribute to solving the problem of inflation?

<p>Optimizing production costs</p> Signup and view all the answers

Which of the following is NOT a common cause of poverty?

<p>Decrease in the cost of living (C)</p> Signup and view all the answers

The expenditure approach to calculating GNP focuses on the final use of goods and services in the economy.

<p>True (A)</p> Signup and view all the answers

What are the two main approaches to calculating GNP?

<p>The two main approaches are the expenditure approach and the income approach.</p> Signup and view all the answers

The GNP equation is: GNP = C + I + G + (X - M), where C stands for ____.

<p>household and individual consumption</p> Signup and view all the answers

Match each economic issue with its corresponding definition:

<p>Poverty = The state or condition in which people lack the financial resources for a minimum standard of living Unemployment = The proportion of people available and seeking paid work but unable to find it Inflation = A general increase in prices of goods and services over a period of time Income Inequality = The uneven distribution of income among individuals or households in a society</p> Signup and view all the answers

Which of the following is NOT a solution proposed to address poverty?

<p>Increase taxes on the wealthy (A)</p> Signup and view all the answers

Rural-urban migration is often a factor contributing to unemployment.

<p>True (A)</p> Signup and view all the answers

What is one common cause of unemployment mentioned in the content?

<p>The number of people entering the job market has been greater than the number of jobs being created.</p> Signup and view all the answers

Which of the following is NOT a basic economic concern?

<p>How to maximize profit for businesses? (C)</p> Signup and view all the answers

In a traditional economic system, decisions are primarily made based on modern technology and innovation.

<p>False (B)</p> Signup and view all the answers

A ______ economic system is characterized by government control over all economic decisions.

<p>command</p> Signup and view all the answers

What is the primary difference between positive and normative economics?

<p>Positive economics focuses on describing economic facts and observations, while normative economics suggests policy recommendations based on values and goals.</p> Signup and view all the answers

Match the economic indicator with its definition:

<p>GDP = Total market value of all finished goods and services produced within a country in a given period GNP = Total market value of goods and services produced by a country's residents, regardless of location Inflation = A general increase in the price level of goods and services over time Unemployment = The percentage of the labor force that is actively seeking employment but unable to find it</p> Signup and view all the answers

Which of the following is NOT a benefit of studying economics?

<p>Resource allocation (D)</p> Signup and view all the answers

The scientific approach in economics involves observing, collecting data, formulating hypotheses, and testing those hypotheses.

<p>True (A)</p> Signup and view all the answers

Explain how positive economics is used to analyze the impact of a government policy on inflation.

<p>Positive economics would examine the data on inflation rates before and after the policy implementation, looking for any correlations or changes in the inflation rate. It would analyze the policy's impact based on objective data and observations.</p> Signup and view all the answers

Flashcards

Basic Economic Concerns

What to produce, how to produce, and for whom to produce.

Economic Systems

Processes societies use to address basic economic concerns.

Traditional Economy

An economy where decisions are based on customs and traditions.

Command Economy

An economic system where the government makes all decisions.

Signup and view all the flashcards

Market Economy

An economy driven by individual and business decisions based on supply and demand.

Signup and view all the flashcards

Positive Economics

Focuses on factual analysis of the economy's current state.

Signup and view all the flashcards

Normative Economics

Focuses on what the economy should aim for or improve through policies.

Signup and view all the flashcards

Gross Domestic Product (GDP)

Total market value of finished products produced within a country in a period.

Signup and view all the flashcards

Economic Policies for Unemployment

Strategies aimed at enhancing job creation especially in labor-intensive sectors.

Signup and view all the flashcards

Rural-Urban Migration

The movement of people from rural areas to cities, often seeking better opportunities.

Signup and view all the flashcards

Job Mismatch

A situation where the skills of workers do not match the demands of available jobs.

Signup and view all the flashcards

Inflation

A decrease in the purchasing power of money, leading to a general increase in prices.

Signup and view all the flashcards

Causes of Income Inequality

Factors contributing to the uneven distribution of income, such as political culture and taxation.

Signup and view all the flashcards

Progressive Taxation

A tax system where higher income earners pay a larger percentage of their income in taxes.

Signup and view all the flashcards

Minimum Wage

The lowest wage that employers may legally pay their workers.

Signup and view all the flashcards

Investment Opportunities

Chances for individuals and entities to invest in businesses, stimulating economic growth.

Signup and view all the flashcards

Expenditure Approach

A method to calculate GNP via consumer, investment, government, and net exports spending.

Signup and view all the flashcards

Income Approach

Calculating GNP by summing up income generated by production processes.

Signup and view all the flashcards

GNP Equation

GNP = C + I + G + (X - M), where each letter represents a component of total expenditure.

Signup and view all the flashcards

Poverty

A condition where individuals or communities lack the financial resources for a minimum living standard.

Signup and view all the flashcards

Common Causes of Poverty

Factors such as high population growth, rising living costs, unemployment, and income inequality.

Signup and view all the flashcards

Solutions for Poverty

Measures including reducing unemployment, improving labor policies, and enhancing social services.

Signup and view all the flashcards

Unemployment

The percentage of people available for work but not currently employed.

Signup and view all the flashcards

Common Causes of Unemployment

Issues like job market saturation and rural-urban migration outpacing job creation.

Signup and view all the flashcards

Study Notes

Utility and Application of Applied Economics

  • Basic Concerns: What to produce, how much, how to produce, and for whom to produce.
  • Economic Systems: Traditional (based on customs), Command (government controls), Market (supply and demand).
  • Importance of Economics: Resource management, budgeting, smart spending, saving, investing.

Scientific Approach in Economics

  • Steps: State, observe, apply, establish, test the hypothesis.
  • Positive Economics: Focuses on facts and current economic situations (e.g., inflation rate).
  • Normative Economics: Focuses on what should be and suggests improvements (e.g., ideal inflation rate).
  • Measuring the Economy: GDP and GNP measure total market value of finished goods/services produced within a country during a specific time period.

GNP/GDP Measurement Approaches

  • Expenditure Approach: GDP = C + I + G + (X - M) (Consumption + Investment + Government Spending + (Exports - Imports)).
  • Income Approach: Focuses on resource contributions throughout production stages.

Economic Issues and Solutions

  • Poverty: Lack of resources to meet basic needs, caused by population growth, cost of living, unemployment, income inequality. Solutions include reducing unemployment, appropriate labor policies, and social service improvements.
  • Unemployment: Proportion of people not in paid employment, caused by job creation lagging behind job market entry. Solutions include appropriate economic strategies for labour intensive industries.
  • Inflation: Decrease in currency's purchasing power, caused by increased prices of goods/services. Solutions include government spending reductions, cost optimization by companies, and interest rate adjustments.
  • Income Inequality: Uneven distribution of income, driven by various factors. Solutions include progressive taxation, money transfers to lower income groups, and subsidised commodities.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Quiz Team

Related Documents

Applied Economics - Basic Concerns PDF

More Like This

Use Quizgecko on...
Browser
Open
Browser
Browser