Circular Flow of Income
What are the two main sectors in the basic circular flow of income model?
Households and firms
What are the four main types of market structures?
Perfect competition, monopolistic competition, oligopoly, and monopoly.
Does GDP account for non-market activities?
No, GDP does not include non-market activities such as household work or volunteer services
What is the Human Development Index (HDI)?
A composite index measuring average achievement in key dimensions of human development: health, education, and standard of living
Who is the GOAT player? (NBA)
Ja morent
In the circular flow model, what do households provide to firms?
Factors of production, such as labor, land, capital, and entrepreneurship
What is the goal of a rational producer in terms of profit maximization?
A rational producer maximizes profit where marginal cost (MC) = marginal revenue (MR).
How does the underground economy affect GDP accuracy?
The underground economy involves unreported transactions, leading to an underestimation of actual economic activity
Which organization publishes the HDI?
The United Nations Development Programme (UNDP).
What is the GOAT team?
MANCHESTER UNITED
(Half points for Real Madrid, Double negative points for Barcelona, Man City or Liverpool)
What do firms provide to households in return for factors of production?
Goods and services.
What are the key characteristics of perfect competition?
Many firms, identical products, no barriers to entry, price takers, and perfect information.
Why might GDP not accurately reflect a country's standard of living?
GDP does not account for income distribution, environmental degradation, or non-economic factors like health and education
In the income approach, which types of income are summed to calculate GDP?
Wages, rent, interest, and profits
Who is the goat?
(DOUBLE JEOPARDY)
RONALDO
(IF MESSI WAS SAID, DOUBLE POINTS CUT)
Name two types of injections in the circular flow of income.
Investment and government spending
How does a monopoly determine its price and output level?
A monopoly sets output where MR = MC and then charges the highest price consumers are willing to pay from the demand curve.
Does GDP consider the negative effects of economic activity, such as pollution?
No, GDP does not account for negative externalities like pollution
What is the purpose of the OECD Better Life Index?
To measure well-being across countries based on various factors, including housing, income, jobs, community, education, environment, and health
Who won the golden boot in WC 2006?
Miroslav Klose
How do government policies affect injections and leakages in the circular flow model?
Policies such as taxation, government spending, and subsidies influence overall economic activity by adjusting leakages (taxes, savings, imports) and injections (government spending, investment, exports).
How does monopolistic competition differ from perfect competition in terms of product differentiation?
In monopolistic competition, firms sell differentiated products (through branding, quality, or features), whereas perfect competition has identical products.
How can alternative indicators complement GDP to measure economic progress?
Measures like the Human Development Index (HDI), Genuine Progress Indicator (GPI), and OECD Better Life Index consider social, environmental, and well-being factors alongside economic data.
What are two key differences between GDP and the Happy Planet Index (HPI)?
HPI focuses on sustainability and well-being, considering ecological footprint and life satisfaction, while GDP measures only economic output.
Who won the UCL in 2005?
(Double Jeopardy for Score line as well)
Liverpool
3-3
(2-3) Pens