48 Questions
Which aspect of economics will be the focus of the workshop next week?
Corporations
What should one be able to explain well in order to do well in economic debates?
Basic mechanisms without relying on jargon
What is the main reason why money is valuable in an economy?
Money can be used to purchase goods and services
What are a lot of economic debates about, according to the speaker?
Individual actor analysis
Which of the following is a reason why inflation doesn't happen as much now?
Companies are hiring fewer people due to automation
What is the definition of deflation?
A decrease in the price of goods and services
Why is deflation considered bad for the economy?
It leads to unemployment and reduced spending
Why do companies have to keep lowering prices during deflation?
To stimulate spending
Which of the following is NOT a reason why inflation happens?
Companies raise prices to out-compete their competitors
What is the ideal target for inflation according to central banks?
Two percent
Why is deflation considered worse than inflation?
There are fewer tools to deal with deflation
What is the main concern when inflation leads to hyperinflation?
Money loses value rapidly
Which action can governments take to prevent a company from failing during a recession?
Bailout
What is the difference between a bailout and a bail-in?
In a bailout, the government pays off the company's debt, while in a bail-in, the debt is cancelled.
Why do governments sometimes choose to bail out companies during a recession?
To prevent a ripple effect of other companies failing
What is the main concern for banks during a recession?
Lack of available money due to loans and investments
During a recession, economic activity is declining because people are not buying and selling goods. What are some reasons that can cause a recession?
Financial crisis, adverse supply shock, and natural disasters
Which of the following is a consequence of losing confidence during a recession?
Increased saving and decreased spending
What is the impact of deflationary spirals during a recession?
They make it harder to recover from recessions
In terms of economic crisis, what was the motion discussed at KCL Open?
The government should withhold information that is likely to damage market confidence
What is the main difference between bailouts and bail-ins?
Bailouts put the burden of debt on the government, while bail-ins put it on the creditors.
Why might bail-ins also result in a loss for taxpayers?
Because hedge funds are often responsible for pension funds, and if those pension funds are creditors and lose money, it affects the government's pension funds.
Why might creditors feel invulnerable in the case of bailouts?
Because bailouts put the burden of debt on the government, which guarantees that the creditors will get their debt paid.
When are bailouts considered to be more suitable than bail-ins?
When the events leading to the financial crisis were unexpected and couldn't have been predicted by the creditors.
Why are recessions considered bad for the economy?
They cause deflationary spirals
What are some reasons that can cause a recession?
Lack of confidence
What is the main concern for banks during a recession?
Loss of market confidence
What was the motion discussed at KCL Open in terms of economic crisis?
The government should withhold information that is likely to damage market confidence
What is the main reason why companies eventually need to raise prices during inflation?
To keep up with the demand for their products
Why do central banks target inflation at around two percent?
To prevent deflation
What is the main concern when inflation leads to hyperinflation?
Decrease in purchasing power
Why is deflation considered worse than inflation?
It causes a decrease in purchasing power
What is the focus of the workshop next week?
Discussing international economics
According to the speaker, why are economic debates easier to analyze compared to social justice debates?
The analysis in economic debates is more concrete
What is the main factor that determines the value of money in an economy?
The confidence of people in the economy
What is the observation made by the speaker regarding economic debates about recessions and crises?
They often focus on individual actor analysis
Why does inflation lead to shortages of goods?
People hoard goods because they fear their money will lose value.
What are two reasons mentioned in the text for why inflation doesn't happen as much now?
Automation and a large labor pool with lower labor costs.
Why is deflation considered bad for the economy?
Companies lower prices, leading to decreased sales and job losses.
What is one reason mentioned in the text for why deflation becomes cyclical and worsens over time?
People expect prices to continue decreasing, so they delay purchases.
Which of the following actions can governments take to respond to a recession?
Bail out companies in financial distress
What is the difference between a bailout and a bail-in?
A bailout involves canceling the company's debt, while a bail-in involves paying off the debt
Why do governments choose to bail out companies during a recession?
To prevent a ripple effect of company failures
What is the main concern when people lose confidence in a bank during a recession?
The bank's ability to pay back depositors
What is the main difference between bailouts and bail-ins?
Bailouts put the onus of debt on the government, while bail-ins put the onus of debt on the creditors
What is the potential consequence of a bail-in, according to the text?
Taxpayers may lose money indirectly through pension funds
Why might creditors feel invulnerable in the case of bailouts?
Because the government guarantees their debt payment
When are bailouts considered to be more suitable than bail-ins, according to the text?
During unexpected events
Quiz: Understanding Recessions and Economic Mechanisms Test your knowledge on recessions and economic mechanisms with this quiz. Explore the key debates surrounding economic crises and learn about different mechanisms used to address recessions. Discover the basic definition of recessions and deepen your understanding of this important topic.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
