Chapter 5: Economic systems - P1

terms

What does GDP stand for?

Gross Domestic Product

What does GDP measure?

The total market value of all finished goods and services produced within a country in a specific time period.

What does GDP show about a country’s economy?

How big and productive the economy is.

What are the three main ways to calculate GDP?

By expenditures, production, or incomes.

What is the difference between real GDP and nominal GDP?

Real GDP accounts for inflation, while nominal GDP does not.

What does GDP per capita represent?

The total value of goods and services produced divided by the population.

How does increased spending or investment affect GDP?

It causes GDP to rise.

According to the ILO, who are considered unemployed?

Unemployed people are defined as those aged 16 or over who are without work, available to start work in the next two weeks and who:

+ have been actively seeking work in the past four weeks, or

+ are waiting to start a new job they have already obtained.

Who are classified as economically inactive /out of the labour force?

People without work who are not seeking or available for work.

What is PPP (Purchasing Power Parity)?

A currency conversion rate that equalizes the purchasing power of different currencies by eliminating price level differences.

What is the purpose of PPP?

To compare economic productivity and standards of living between countries.

What is an interest rate?

The cost of borrowing money.

When do banks perform best in the short term, high or low interest rates?

When interest rates are lower.

What is inflation?

The rate at which prices for goods and services rise, causing a decline in purchasing power.

What is deflation?

The decline of prices, which increases purchasing power.

What is the economy?

The way a society organizes the production, distribution, and consumption of goods and services.

What is economics?

the study of how society manages its scarce resources.

What are the three basic economic questions?

What to produce, how to produce it, and who gets the products.

Name the four main types of economic systems.

Traditional, Command, Market, and Mixed.

In a __ economy, economic questions are answered based on traditions.

traditional

A traditional economy often uses a __ system to trade goods.

barter

In a command economy, the __ makes all the economic decisions.

government

A command economy is also called a __ economy.

centrally planned

In a market economy, the production and distribution of goods are controlled by ….and …..

supply and demand

In a market economy, people have the right to __ property and make their own economic choices.

private

A __ economy combines elements of both government and individual decision-making.

mixed

On the economic continuum, a pure command economy lies on the __ side.

left

On the economic continuum, a pure market economy lies on the __ side.

right

Primary industry includes activities such as __, __, and __.

mining, farming, fishing

Secondary industry focuses on __ or processing raw materials.

manufacturing

Tertiary industry provides __ to people or other businesses.

services

Quaternary industry involves knowledge-based activities such as and .

research and development, journalism

One advantage of a command economy is that ___ are taken care of

basic needs

One disadvantage of a traditional economy is __.

lack of progress or innovation

One disadvantage of a market economy is that it may lead to ….and …..

unemployment, inequality

Interest rates are influenced by the supply and demand for __.

credit