Applied Economics Second Quarter Quiz
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Questions and Answers

Which of these statements are considered positive? (Select all that apply)

  • The government should increase taxes on sugar to decrease mortalities due to diabetes.
  • The government should decrease taxes on sugar to address the issue of diabetes.
  • The government should invest more in education to improve the quality of life for citizens.
  • Gross Domestic Product measures the productivity of a country. (correct)
  • What is an economic model?

    Representations of empirically tested economic and social phenomena.

    The assumption ceteris parabis means that other factors are assumed to be constant in an economic analysis, while only one factor changes.

    True (A)

    What is the GDP?

    <p>A measure of the total value of goods and services produced within a country's borders in a given period, usually a year.</p> Signup and view all the answers

    What is GNI?

    <p>A measure of a country's total income: The total earnings of all the people and businesses in a country, whether they're earned inside or outside the country's borders.</p> Signup and view all the answers

    What is the inflation rate?

    <p>The growth rate of CPI (Consumer Price Index). It measures the rate of change in the general price level of goods and services over time.</p> Signup and view all the answers

    Which type of inflation is caused by a decrease in demand for a product with few supply?

    <p>Demand-pull Inflation (B)</p> Signup and view all the answers

    Which of these is a determinant of price elasticity of demand?

    <p>All of the above (D)</p> Signup and view all the answers

    What does the Lorenz Curve represent?

    <p>A graphical representation of income inequality in a society.</p> Signup and view all the answers

    What does the Gini coefficient measure?

    <p>The degree of income inequality in a society. It is calculated as the ratio of the area between the Lorenz curve and the line of perfect equality to the total area under the line of perfect equality.</p> Signup and view all the answers

    What is economic growth?

    <p>An increase in the real output of goods and services in a country, often measured by the growth in GDP.</p> Signup and view all the answers

    What is the Labor Force Participation Rate?

    <p>A percentage representing those in the labor force (employed and unemployed) compared to the total population aged 15 years and over.</p> Signup and view all the answers

    What is the Employment Rate?

    <p>A percentage representing the number of employed individuals compared to the total population in the labor force.</p> Signup and view all the answers

    What is Underemployment?

    <p>A situation where individuals are employed but working fewer hours or in jobs below their skill level, leading to a desire for more work or a better job.</p> Signup and view all the answers

    What are the types of unemployed individuals based on the reasons for their joblessness? (Choose all that apply).

    <p>Structural (A), Cyclical (C), Frictional (D)</p> Signup and view all the answers

    What is Income Inequality?

    <p>The extent to which income is distributed unevenly across individuals in a society.</p> Signup and view all the answers

    What is Economic Development?

    <p>A broad concept that encompasses both economic growth and improvements in the quality of life for individuals, including factors such as education, healthcare, and social well-being.</p> Signup and view all the answers

    What is fiscal policy?

    <p>The use of government spending and taxation to influence macroeconomic variables, such as employment, inflation, and economic growth.</p> Signup and view all the answers

    What is monetary policy?

    <p>Actions taken by a central bank to manage the money supply and interest rates to influence the economy.</p> Signup and view all the answers

    What is a tariff policy?

    <p>A tax levied on imported goods and services. (C)</p> Signup and view all the answers

    What is a quota policy?

    <p>A limit on the quantity of a particular good or service that can be imported. (C)</p> Signup and view all the answers

    Government purchases are expenses for goods and services bought by the government.

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

    What are net exports?

    <p>The total value of exports minus the total value of imports. (B)</p> Signup and view all the answers

    The income approach for calculating GDP involves adding up all the income generated by selling final goods and services produced in the economy.

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

    The industrial origin approach for calculating GDP involves adding up the market value of goods produced by each industry in the economy.

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

    The value-added approach for calculating GDP involves adding up the value added at each stage of production for all goods and services produced in the economy.

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

    When calculating GDP, we should NOT include private transfer payments such as pensions, gifts, or charitable donations.

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

    When calculating GDP, we should NOT include transactions in the underground economy.

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

    What does nominal GDP present?

    <p>The value of goods and services at current prices. (C)</p> Signup and view all the answers

    The GDP deflator is a measure of the overall price level of goods and services produced in an economy.

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

    The expenditure approach for calculating GDP involves adding up all the spending on final goods and services produced in an economy.

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

    Flashcards

    Positive statement

    A statement that describes the world as it is, focusing on facts and measurable data.

    Normative statement

    A statement that describes how the world should be, expressing a value judgment.

    Economic theory

    A simplified representation of economic phenomena or relationships between economic variables.

    Economic model

    A representation of economic and social phenomena, often including assumptions.

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    Assumption

    A condition set for economic analysis.

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    Economic variable

    An element in an economic study that can change.

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    Economic function

    Describes the relationship between variables; often written as 'variable = function(other variables)'

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    Economic equation

    A mathematical expression that describes an economic concept.

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    Gross Domestic Product (GDP)

    The total value of goods and services produced within a country in a given time period.

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    Market structure

    The organization's operating environment concerning entry difficulty, competition, and vendors.

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    Perfect Competition

    A market structure with no monopolies.

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    Consumption

    Spending by individuals on goods and services.

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    Investment

    Spending by businesses to grow or improve.

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    Government Spending

    Money spent by the government on public goods and services.

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    Net Exports

    Difference between exports and imports.

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    GDP = C + I + G + NX

    GDP equation, where C is Consumption, I is Investment, G is Government Spending, and NX is Net Exports

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    Study Notes

    Applied Economics - Second Quarter Reviewer

    • Methods of Analyzing Economic Data:

      • Theories and Models in Economics:

        • Economic Theories: Simplified versions of economic phenomena and relationships between economic variables.
        • Economic Models: Representations of empirically tested economic and social phenomena, with specific assumptions.
      • Ways of Stating Economic Analysis:

        • Positive statements: Describe what is, often used in qualitative and quantitative approaches. (e.g., "Gross domestic product measures the productivity of a nation.")
        • Normative statements: Express opinions or judgments about what ought to be, involving value judgments on phenomena or policies. (e.g., "The government should increase taxes on sugar to decrease mortalities due to diabetes.")
      • Tools in Illustrating Economic Phenomena:

        • Economic Variables: Elements or data in a study that can change.
        • Functions: Relationship between variables (e.g., D = f(p): Demand is a function of price).
        • Economic Equations: Mathematical expressions of an economic concept (e.g., Y = C + I).
        • Graphs: Visual representations of the relationship between two or more variables.

    Socio-economic Conditions of the Contemporary Philippines

    • Macroeconomic Statistics: Data related to the Philippine economy.
      • Gross Domestic Product (GDP): A measure of the total value of goods and services produced within a country's borders in a given period of time.
      • GDP components: Consumption (C), Investment (I), Government Spending (G), and Net Exports (NX).
      • Other Economic Indicators: Year-on-Year Growth Rates of GDP, Q1 2021 to Q1 2024
      • Major industries: Agriculture, forestry, and fishing; Industry; Services
      • Major expenditure Items: Household Final Consumption Expenditure, Government Final Consumption Expenditure, Gross Capital Formation, Exports of Goods and Services.

    Market Structures

    • What is a Market Structure?: An organization's operating environment. Consideration of factors like entry difficulty and the number of vendors indicates industry competitiveness.
    • Degrees of Competition: Categories of market structures based on the number of firms, bargaining power of consumers and suppliers, and barriers to entry.
    • Market Structures:
      • Perfect Competition: Theoretical structure with no monopolies. Consumer influence on price is high.
      • Monopoly: Single seller or producer with no substitutes.
      • Monopolistic Competition: Many firms offering similar yet not identical products or services.
      • Oligopoly: Market with a small number of producers, with significant influence on others.

    Price Elasticities of Demand & Supply

    • Price Elasticity: Measurement of responsiveness in demand or supply to a price change.
      • Point Elasticity: Measures elasticity at a specific point on a curve.
      • Arc Elasticity: Measures elasticity over a range of prices.
      • Elasticity Values: Coefficient values define different degrees of elasticity (e.g., Elastic, Inelastic, Unit Elastic). Relate to changes in quantity demanded or supplied based on price changes.

    Price Elasticity of Demand and Total Revenue

    • Price Elasticity of Demand (PED): Measures the responsiveness of quantity demanded to price changes.
    • Total Revenue Test: A way to understand the relationship between price and total revenue based on elasticity values.
    • Elastic Demand: Price increases reduce total revenue; price decreases increase total revenue.
    • Inelastic Demand: Price increases increase total revenue, price decreases reduce total revenue.
    • Unit Elastic Demand: Total revenue remains unaffected or changed by small quantities by price increases.

    Income and Cross Elasticity of Demand

    • Income Elasticity of Demand: Measures the responsiveness of quantity demanded to changes in consumer income.
    • Positive: Increase in income leads to an increase and demand.
    • Negative: Increase in income leads to a decrease in demand.
    • Cross Elasticity of Demand: Measures the responsiveness of quantity demanded of one good to price changes in another good.

    Determinants of Price Elasticity of Demand and Supply

    • Factors that affect elasticity: They include availability of substitutes, time period, proportion of income spent, and necessarity of the good.

    Measuring Economic Growth and other Concepts

    • Gross Domestic Product (GDP): Total value of final goods and services in a country.
    • Gross National Product (GNP): Total value of final goods and services produced by a country's residents, regardless of location.
    • Gross National Income (GNI): Measure of total income of a country.
    • Simple Formulas: Relationships among different factors to calculate GDP.
    • GDP Calculation Approaches. There are different methods to calculate GDP, such as expenditure, income, and production approaches.
    • Other Indicators: Sample Problems concerning employment statistics.

    Types of Inflation and Inequality

    • Inflation: The rising general price level that reduces purchasing power of money.
    • Headline Inflation and Core Inflation: These are different measures of inflation focusing on different sets of goods and services, and are usually calculated using a “basket” of goods and services.
    • Demand-pull Inflation and Cost-Push Inflation:These are factors that cause inflation.
    • Measurement of Income Inequality: Economists use the Lorenz curve and Gini coefficient to understand income distribution.

    Additional Notes and Macroeconomic policies

    • Additional Notes on market concepts with sample questions and answers.
    • Macroeconomic policies on trade (tariffs, quotas).
    • Macroeconomic Monetary Policies and fiscal policies.

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    Description

    Test your understanding of key concepts in applied economics, including theories, models, and methods of analyzing economic data. This quiz covers both positive and normative statements and the tools used to illustrate economic phenomena.

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