Economic Concepts Quiz

per person figures can be misleading because they don't consider differences in the cost of living.

• Gross domestic product (GDP)

• Gross national income (GNI)

• Purchasing power parity (PPP)

• Human Development Index (HDI)

GNI per capita can be adjusted by to account for differences in the cost of living.

• gross domestic product

• gross values added

• purchasing power

• the total value of goods and services produced

The adjustment allows for a more direct comparison of living standards in different countries.

• gross domestic product

• value added

• gross national income (GNI)

• purchasing power parity (PPP)

Whatever might the presence of a black (or shadow) economy in a country mean to that country's economy?

• A black economy indicates the overall level of corruption in that country is high and potential business investors will be wary of entering that country's market leading to a reduction in the country's GDP.

• A black economy may indicate that large amounts of economic activity have been unrecorded signaling that the country's economic figures may be unreliable.

• A shadow economy indicates that the country operates two markets-one for the domestic market, the other for the international market. Having two markets raises the country's overall economic performance.

• A shadow economy indicates that the country is not willing to be forthright in its business dealings-it 'hides' any potential untapped markets to protect its domestic producers. This will have a negative effect on its economy.

In a , the state owns all means of production.

• mixed economy

• planned economy

• market economy

• privatized economy

The economic freedom associated with a creates greater incentives for innovation and entrepreneurship than either a planned or a mixed economy.

• closed economy

• political economy

• market economy

• command economy

Whatever legal means can be used by the state to expropriate the profits from business innovation?

• demands for money to grant a license

• expropriation

• enforcing property rights

• excessive taxation

Several of the fastest-growing Asian economies adopted more governments during the past three decades, including South Korea and Taiwan.

• totalitarian

• democratic

• dictatorial

• socialist

Investing in is an important determinant of economic development as it leads to higher growth rates and a more productive population.

• services

• centralized urban centers

• education

• manufacturing

To account for differences in the cost of living, one can adjust GNI per capita by , which allows for a more direct comparison of living standards in different countries.

• gross domestic product

• the Human Development Index

• living standards rate

• purchasing power