#1
What is inflation?
An increase in the general price level of goods and services
ExplanationInflation is a rise in the overall prices of goods and services, reducing the purchasing power of money.
#2
What is GDP?
Gross Domestic Product
ExplanationGDP measures the total value of all goods and services produced within a country's borders in a specific period.
#3
What is a trade deficit?
A situation where a country imports more goods than it exports
ExplanationA trade deficit occurs when a nation's imports exceed its exports, resulting in a negative balance of trade.
#4
What is the purpose of a central bank's discount rate?
To discourage borrowing by raising interest rates
ExplanationThe discount rate is the interest rate at which the central bank lends to commercial banks, influencing borrowing costs and overall economic activity.
#5
What is a trade surplus?
A situation where a country exports more goods than it imports
ExplanationA trade surplus occurs when the value of a country's exports exceeds the value of its imports, leading to a positive balance of trade.
#6
What is fiscal policy?
The use of government spending and taxation to influence the economy
ExplanationFiscal policy involves government actions to manage revenue and spending to achieve economic goals.
#7
What is a stock market index?
A measure of the performance of a specific group of stocks
ExplanationA stock market index tracks the performance of a selection of stocks, providing insight into overall market trends.
#8
What is the Phillips Curve?
A graphical representation of the trade-off between inflation and unemployment
ExplanationThe Phillips Curve illustrates the inverse relationship between unemployment and inflation rates.
#9
What is the difference between monetary policy and fiscal policy?
Monetary policy involves managing the money supply, while fiscal policy involves government spending and taxation
ExplanationMonetary policy focuses on regulating the money supply and interest rates, whereas fiscal policy deals with government revenue and expenditure.
#10
What is the difference between a recession and a depression?
A recession is a short-term economic downturn, while a depression is a prolonged and severe economic contraction
ExplanationRecessions are temporary declines in economic activity, whereas depressions are prolonged periods of economic contraction with severe declines in GDP and widespread unemployment.
#11
What is quantitative easing?
A monetary policy in which a central bank buys long-term securities to increase the money supply
ExplanationQuantitative easing involves central banks purchasing financial assets to stimulate the economy by increasing liquidity and lowering interest rates.
#12
What is the time value of money?
The concept that money can earn interest over time
ExplanationThe time value of money refers to the principle that a sum of money is worth more in the present than the same sum in the future due to its potential earning capacity.
#13
What is a sovereign wealth fund?
A government-owned fund investing in foreign assets
ExplanationSovereign wealth funds are state-owned investment funds that invest in various financial assets, often abroad, to generate wealth for future generations.
#14
What is the Laffer Curve used to illustrate?
The relationship between tax rates and government revenue
ExplanationThe Laffer Curve demonstrates the theoretical relationship between tax rates and tax revenue, suggesting an optimal tax rate that maximizes revenue.
#15
What is the Taylor Rule in monetary policy?
A guideline for setting interest rates based on inflation and output levels
ExplanationThe Taylor Rule is a monetary policy guideline that suggests adjusting interest rates in response to changes in inflation and economic output to stabilize the economy.