Recessions & Crises
Q: What defines a recession?
A: A period of economic decline lasting at least two consecutive quarters with falling GDP and rising unemployment.
Q: What is globalization?
A: The increasing connection of countries through trade, technology, culture, and communication.
Q: What are the three basic economic questions all societies answer?
A: What to produce, how to produce, and who gets it.
Q: Who was Adam Smith and why is he important?
A: A thinker who promoted free markets and the idea of the “invisible hand.”
Q: What is economic geography?
A: The study of how people produce, distribute, and consume goods based on location.
Q: Name two common signs of a recession.
A: Job losses, reduced spending, business slowdowns, or stock market decline.
Q: Why do countries trade with each other?
A: Because no country has all resources and they can specialize and trade for what they lack.
Q: What is capitalism?
A: An economic system based on private ownership and profit, with prices set by supply and demand.
Q: What was mercantilism?
A: An early economic system where countries tried to gain wealth by controlling trade and colonies.
Q: What is a supply chain?
A: The steps involved in producing and delivering a product from raw materials to consumers.
Q: What is the main difference between a recession and a depression?
A: A recession is shorter and less severe; a depression is long-lasting and much more severe.
Q: What is comparative advantage?
A: When a country produces goods more efficiently than others and trades for the rest.
Q: What is communism?
A: A system where the government controls all production and aims for a classless society.
Q: How did colonization support capitalism?
A: Colonies provided raw materials and labor, increasing wealth for European nations.
Q: What is the difference between imports and exports?
A: Imports are goods brought in; exports are goods sent out.
Q: What major event triggered the Great Depression?
A: The 1929 stock market crash.
Q: How does globalization help promote peace?
A: Countries that trade depend on each other, making conflict costly.
Q: What is socialism?
A: A mixed system where the government regulates key industries to reduce inequality.
Q: What major change happened during the Industrial Revolution?
A: Machines replaced hand production, increasing output and factory growth.
Q: What is economic power?
A: The ability of a country to influence others through trade, money, or resources.
Q: What were two major effects of the Great Depression?
A: Massive unemployment (~25%) and widespread poverty/homelessness.
Q: Name one benefit and one challenge of globalization.
A: Benefit: lower prices/more goods; Challenge: job loss or inequality.
Q: What is one major weakness of communism?
A: Lack of incentives, inefficiency, or shortages of goods.
Q: Name one criticism of capitalism.
A: Wealth inequality or worker exploitation.
Q: Name one tool countries use to exercise economic power.
A: Sanctions, trade agreements, foreign aid, or control of resources.