microeconomics
What is the law of demand?
When the price of a good increases and the quantity demanded decreases
What is GDP?
Gross Domestic Product is the total value of all final goods and services
What is economic development?
Improvement in living standards income and overall well being
What is behavioral economics?
The study of how psychological factors
What is international trade?
The exchange of goods and services between countries
What happens to quantity demanded when prices increase?
Quantity demanded decreases.
What are the main causes of inflation?
Demand pull high demand cost push rising production costs
What are common indicators of development?
Human Development
What is a cognitive bias?
A systematic error in thinking that affects decisions
What is an exchange rate?
The value of one currency compared to another
How do supply and demand determine market equilibrium?
Equilibrium occurs where quantity supplied equals quantity demanded
How does unemployment impact an economy?
It reduces income lowers consumer spending
How does education impact economic growth?
It improves skills productivity and innovation
How does loss aversion affect decision-making?
People prefer avoiding losses over gaining equivalent gains
What are the benefits of free trade?
Greater efficiency lower prices
What is price elasticity of demand and how is it calculated?
It measures how responsive demand is to price changes
What tools do central banks use to control inflation?
Interest rates open market operations and reserve requirements
What role do institutions play in development?
Enforce laws reduce corruption and encourage investment
What is the “nudge” theory and how is it applied?
It involves subtly guiding choices
How do tariffs affect global markets?
They raise prices reduce trade
How would a price ceiling affect a competitive market in the long run?
It can create shortages reduce supply and may lead to black markets
How do fiscal and monetary policy interact during a recession?
Governments may increase spending or cut taxes
Why do some countries remain trapped in poverty despite aid?
Reasons include corruption weak institutions
How do heuristics lead to systematic errors in markets?
People rely on mental shortcuts, which can cause predictable mistakes
How do currency fluctuations impact a country’s trade balance?
A weaker currency boosts exports and reduces imports