Understanding Economic Issues

What is inflation and how does it affect purchasing power?

• Inflation has no effect on purchasing power.

• Inflation decreases purchasing power as it raises the prices of goods and services.

• Inflation only affects the stock market, not consumer goods.

• Inflation increases purchasing power by lowering prices.

What are the main causes of unemployment?

• Economic downturns, technological changes, seasonal employment, structural changes, and skill mismatches.

• Higher wages for all workers

• Increased job satisfaction

• More job openings in every sector

How does the law of supply and demand influence market prices?

• Market prices are fixed and do not change over time.

• Supply and demand have no effect on market prices.

• The law of supply and demand influences market prices by determining the equilibrium price based on the relationship between supply and demand.

• Market prices are solely determined by government regulations.

What is fiscal policy and how does it impact the economy?

• Fiscal policy is solely about regulating interest rates.

• Fiscal policy is the use of government spending and taxation to influence the economy.

• Fiscal policy is the government's strategy for managing inflation only.

• Fiscal policy refers to the central bank's control over money supply.

What are some challenges associated with global trade?

• Challenges associated with global trade include trade barriers, political instability, currency fluctuations, regulatory differences, and logistical issues.

• Stable exchange rates for all currencies

• Increased tariffs on domestic goods

• Enhanced cooperation between countries

What is the balance of payments and why is it important?

• The balance of payments is a measure of a country's population growth.

• The balance of payments only includes government transactions.

• The balance of payments is irrelevant to international trade.

• The balance of payments is a record of all economic transactions between a country and the rest of the world, and it is important for assessing economic stability and guiding policy.

How is Gross Domestic Product (GDP) calculated?

• GDP is calculated as the total of consumption, investment, government spending, and net exports (exports minus imports).

• GDP is calculated by adding the total number of employees in a country.

• GDP is calculated based on the average income of citizens.

• GDP is determined solely by the total value of imports.

What factors can cause exchange rates to fluctuate?

• Technological advancements

• Weather patterns

• Cultural trends

• Interest rates, inflation, political stability, economic performance, market speculation, supply and demand.

How does inflation impact interest rates?

• Inflation leads to lower interest rates.

• Interest rates remain unchanged during inflation.

• Inflation generally causes interest rates to rise.

• Inflation has no effect on interest rates.

What are the different types of unemployment?

• Frictional, Structural, Cyclical, Seasonal, Long-term

• Temporary, Permanent, Voluntary

• Involuntary, Underemployment, Disguised

• Natural, Hidden, Frictional