Absolute Advantage
What is the Definition of Absolute Advantage
The ability of an actor to produce more of a good or service than a competitor.
What is the definition of Comparative Advantage?
The ability of an actor to produce a good or service for a lower opportunity cost than a competitor.
What does GDP and GNP stand for?
Gross Domestic Product. Gross National Product.
What is the definition of unemployment rate. What is the definition of SOL (standard of living)?
The number of unemployed people as a percent in the work force. The levels of income, comforts, and services available to a society.
What is the definition of inflation?
A general increase in prices and the fall in purchasing value of money.
Why is absolute advantage important?
One company's greater access to resources can make it's design and manufacturing process more efficient.
What does comparative advantage have the most influence on?
Globalization because countries have a higher material outcome by producing only goods where they have a comparative advantage in trading.
Why is it important that the GDP grows yearly?
It gives information about how the economy is preforming and its size.
What does the unemployment rate indicate when jobs are scarce.
The economic conditions are changing and in poor shape.
What the the most well-known indicator of inflation.
Consumer Price Index (CPI).
What is a weakness of absolute advantage between groups?
Issues can arise when the supply of any good outweighs the demand between countries.
How does comparitive advantage lead to growth?
It allows a country to reduce its average capital-output ratio.
What is different between GDP and GNP?
GDP measures value of goods and services produced within a country's boarders. GNP measures the value of goods and services produced by a country's citizens.
What factors can influence unemployment rate?
aggregate demand, global competition, education, automation, and demographics
What are some factors influencing inflation?
Demand-pull, cost-push, and built-in inflation