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TRANSCRIPT
Question: ◦ What is a negative externality?
Answer: ◦ Something that has a negative spillover
effect on a third party
Question◦ What are the two types of inflation?
Answer◦ Cost-Push and Demand-Pull
AND 1◦ Explain what causes Cost-Push Inflation
Question
◦ What is the difference between official and unofficial aid?
Answer◦ Official aid is from the government,
unofficial aid is from a NGO
Question
◦ What is a price floor?
Answer◦ A minimum price
AND 1◦ Does a price floor create a surplus or a shortage?
Question
◦ What is opportunity cost?
Answer◦ The cost of an economic decision in terms of what
was given up.
Question
◦ What are regressive taxes?
Answer◦ Taxes that tax the rich less than the poor.
AND 1◦ Give an example of a regressive tax.
Question
◦ What is the purpose of the WTO?
Answer◦ Lower tariffs
◦ Provide forum for trade negotiation
◦ Promote free-trade
◦ Help developing nations develop
Question
◦ What is the free-market?
Answer◦ When economic decisions are made by the invisible
hand of supply and demand.
Question
◦ What is monetary policy?
Answer:◦ Manipulation of an economy through the money
supply.
◦ A demand-side policy with the Central Bank using changes in the money supply or interest rates to affect AD
Question
◦ What are interest rates?
Answer◦ Return on deposits, price of loans. ◦ The price of capital or borrowed/loaned money, usually
expressed as a percentage.
AND 1◦ What will happen to the money supply if interest rates
increase?
Question
◦ Describe what will happen in a market economy if prices are too high.
Answer:◦ A surplus will be created. Eventually
prices will be lowered.
Question◦ List 3 types of unemployment
Answer:◦ Cyclical, Classical, Structural, Frictional, Seasonal
And 1:◦ Explain the cause of cyclical unemployment.
Question
◦ Give an example of a NGO.
Answer◦ Red Cross, Habitat for Humanity, Greenpeace,
Grameen Bank
Question
◦ What are the benefits of trade liberalization for developing countries?
Answer:◦ Encourages investment.
◦ Promotes efficiency.
Question
◦ Give an example of something that would cause appreciation of a currency.
Answer:◦ Higher interest rates◦ Speculation ◦ Investment into a country◦ Current Account Surplus◦ Trade Barriers
Question
◦ What are the factors of production? (list 3)
Answer:◦ Land, labor, capital, entrepeneurship
Question
◦ What is foreign direct investment
Answer:◦ Investment in stores, factories, and production
centers in another country by a MNC
◦ Establishment of production units by multinational companies in a foreign country
Question
◦ What is the difference between a specific and a percentage tax.
Answer◦ A specific tax is a flat amount. A
percentage tax is…a percentage?
Question
◦ What is the difference between GDP and GNI?
Answer◦ GDP accounts for all production within the borders
of an economy◦ GNI accounts for all revenues collected within an
economy (including returns on foreign investment)
Question
◦ Give two examples of non-tariff barriers to trade.
Answer:◦ Quota, Administrative Obstacles,
Subsidies, Regulations
Question◦ What can cause demand to increase?
(provide 3 ways)
Answer◦ Decrease in income, population,
expectations. Increase in price of complement goods. Changes in tastes/preferences.
Question
◦ What can a central bank do to depreciate its currency?
Answer◦ Lower interest rates. Sell its currency on
the foreign exchange market.
Question
◦ Give an example of a demand-side policy.
Answer◦ Increase in government spending.
Lowering interest rates. Increasing welfare spending.
Question◦ Give an example of supply-side policies.
Answer:◦ Lowering wages, investing in technology,
reducing taxes, reducing regulation, providing job training
AND 1◦ Describe how you would show the success
of a supply-side policy with a diagram
Question
◦ How much government reduce an overproduced negative externality (like pollution)
Answer◦ Fines, taxes (incentives and
disincentives, bans, tradable permits
Question
◦ What is project aid?
Answer:◦ Aid given to a developing nation for the purposes of
a specific project.
Question
◦ What is dumping?
Answer◦ Selling goods below costs in order to
predatory price.
AND 1:◦ Explain why anti-dumping tariffs are
justified by the WTO.