Supply & Demand
What happens to the price of a good when demand increases and supply stays the same?
The price increases.
What does the Human Development Index (HDI) measure?
It measures a country's overall development based on factors like life expectancy, education, and income.
What does GDP stand for?
Gross Domestic Product.
What is meant by a country having a "diverse economy"?
It means the country has various industries like agriculture, manufacturing, and services.
What is inflation?
Inflation is the increase in the prices of goods and services over time.
If the price of a substitute good decreases, what might happen to the demand for the original product?
The demand for the original product may decrease.
Which of the following is not in the HDI?
A) Life expectancy
B) Education
C) Internet access
D) Income per capital
C) Internet access
GDP can be measured in two ways: nominal and real. What’s the difference between the two?
Nominal GDP is measured at current prices, while real GDP is adjusted for inflation.
A country with a high GDP from oil exports, but little else, would likely have a(n) ______ economy.
Undiversified economy.
What term is used to describe the loss of purchasing power due to inflation?
Currency depreciation.
What is "price elasticity of demand"?
It measures how much the quantity demanded of a good responds to a change in its price.
A country with high levels of education and healthcare but low income will likely have a higher or lower HDI?
Higher HDI.
hich of the following would be excluded from GDP calculation?
A) New car purchased by a family
B) A car sold by a used car dealer
C) The salary of a teacher
D) The purchase of a second-hand house
D) The purchase of a second-hand house.
Why might a country with a diversified economy be more resilient during global financial crises?
Because it relies on multiple sectors, reducing the risk of economic collapse if one sector fails.
If a country’s inflation rate is higher than its trading partners, what will likely happen to its currency?
Its currency will likely depreciate.
What is meant by "demand shift" and what factors could cause it?
A demand shift refers to a change in the quantity demanded at every price level, caused by factors like changes in income, preferences, or the price of related goods.
Which region is most likely to have a lower HDI: Sub-Saharan Africa, Western Europe, or East Asia?
Sub-Saharan Africa.
Which of the following is considered a limitation of GDP as a measure of national well-being?
A) It excludes external debts
B) It includes the value of unpaid household work
C) It doesn't account for environmental degradation
D) It accounts for economic inequality
C) It doesn't account for environmental degradation.
Why is it risky for countries to rely heavily on one industry (e.g., oil, tourism)?
If the industry faces a downturn or collapse, the economy as a whole could suffer greatly.
Hyperinflation is when inflation exceeds what percentage per month?
50% per month.
What is the "law of supply," and how does it relate to price?
The law of supply states that as the price of a good rises, the quantity supplied increases, assuming other factors remain constant.
Why might two countries with similar HDI scores have very different social outcomes (e.g., life expectancy)?
Different weights given to factors like health care access, lifestyle, and social security policies.
Why might two countries with similar HDI scores have very different social outcomes (e.g., life expectancy)?
Different weights given to factors like health care access, lifestyle, and social security policies.
What is the role of government policy in encouraging economic diversification?
Governments can encourage diversification by investing in education, infrastructure, and industries outside of the dominant sector.
What is the term for a situation in which a country's inflation and unemployment rates are high simultaneously?
Stagflation.