Sample Quiz

The movement of money between different economic actors in a country.

The distribution of wealth within a society.

The balance of payments is a record of all economic transactions between a country and the rest of the world. It includes the current account, the capital account, and the financial account. Interest payments are a part of the current account, which covers transactions related to goods, services, and income.

A higher risk generally implies a higher expected return. Investors seek higher returns for taking on greater risks.

In a market economy, the price mechanism plays a crucial role in communicating information about demand to suppliers. This information helps guide production decisions and resource allocation.

Direct financing involves lenders and borrowers directly interacting without intermediaries. In contrast, indirect financing involves financial intermediaries like banks or other institutions that facilitate the transfer of funds between lenders and borrowers.

In recent years, Finland's government has spent more than its revenue, resulting in a budget deficit. This signifies that the government is borrowing money to cover its expenses, contributing to a growing national debt.

The principle of comparative advantage dictates how countries specialize in producing and exporting goods or services that they can produce more efficiently at a lower opportunity cost compared to other countries. This leads to mutually beneficial international trade.

Countercyclical fiscal policy aims to stabilize the economy by adjusting government spending and taxation levels to counter fluctuations in the business cycle. This involves increasing spending or reducing taxes during economic downturns and decreasing spending or raising taxes during boom periods. The goal is to smooth out economic cycles and prevent extreme swings in output, employment, and inflation.

A joint-stock company, or corporation, is the most prevalent form of business organization because it offers advantages like limited liability and greater access to capital. It allows shareholders to invest in the business while limiting their liability to the amount they have invested. Additionally, corporations can raise funds more easily by issuing stock and can continue to operate even if shareholders change.

Private companies contribute significantly to employment, generating more jobs than the public sector.

Most of the goods and services consumed in an economy are produced by private businesses, making them a key driver of economic activity.

In Finland, there are approximately four million people working in a wide range of businesses.

Private businesses contribute a significant portion to Finland's Gross Domestic Product (GDP), which reflects the total value of goods and services produced within the country.

While businesses aim to generate profits for their shareholders, they also create jobs, contribute to the economy, and provide goods and services that benefit consumers.

Businesses often make sacrifices to expand into new markets, sometimes selling products at a loss to establish a presence and build customer loyalty. This can involve strategic pricing and market penetration efforts.

New market entrants often bring competition and innovation, leading to better prices, product quality, and choices for consumers. This increased competition drives businesses to meet consumer needs and preferences better.

Competition forces companies to listen to customers, as their success depends on meeting their needs and wants. This creates an incentive to innovate, improve products and services, and offer competitive pricing.

In smaller markets, competition might be limited, leading to situations where a few dominant firms control most of the market share. This can reduce consumer choices and potentially lead to higher prices.

When a company goes bankrupt, its resources are not necessarily wasted. Assets can be sold, redistributed, or used to start new businesses. This allows for the recycling of resources within the economy.