ECON0002 TERM 1 ACTUAL EXAM BANK / 250+ QUESTIONS AND VERIFIED SOLUTIONS 2024/2025 GRADED A+.

ECON0002 TERM 1 ACTUAL EXAM BANK / 250+ QUESTIONS AND VERIFIED SOLUTIONS 2024/2025 GRADED A+. 2 / 14 1. What is the 90/10 ratio?: average income of the richest 10% divided by theaverage income of the poorest 90% 2. What does disposable income not measure?: quality of social and physicalenvironment, amount of free time, goods and services you can't buy, goods andservices that are produced within the household 3. How to calculate nominal gdp?: sum of (price of good i x quantity of good i) 4. How to calculate real gdp?: multiply pricesfrom base year by quantitiesfor yearof measurement 5. How do we compare living standards across countries?: use estimates of GDP per capita in a common set of prices (purchasing power parity PPP prices). Because exchange rates stop you comparing countries accurately 6. What is the ratio scale?: With GDP per capita doubling up the vertical axis 7. what is the ratio scale used for?: comparing growth rates 8. What does a steeper line in the ratio scale chart mean?: Faster growth rate 9. growth rate =: change in income/original level of income 10. what does a growth rate of 100% mean?: level of income doubles 11. What is technology in economics?: a process that takes a set of materials and other inputs, including the work of people and machines, and creates an output 12. Examples of hockey stick graph: Gross domestic product per capita, produc- tivity of labour, connectivity of the various parts of the world, impact of the economyon the global environment 13. What is a centrally planned economic system?: The government controls production and decides how goods should be distributed, and to whom 14. What does a market economy consist of?: Private property and markets 15. What does a capitalist economy consist of?: Private property, markets andfirms 16. What is absolute advantage?: If the inputs to produce a good are less than insome other person or country 17. What is comparative advantage?: If the cost of producing an additional unit of a good relative to the cost of producing another good is lower than another person or country's cost to produce the same two goods 18. Explanations for why capitalism is less dynamic?: private property is not secure (weak 3 / 14 enforcement of the law or expropriation), markets are not competitive,firms owned by people only because of connections 19. How can firms stay ahead of the competition in capitalist economies?: Byconstantly innovating 20. How do governments help economies work?: They adjudicate disputes over ownership and enforce property rights necessary for markets to work 21. Why is an equilibrium atsubsistence level an equilibrium?: Because move-ments away from subsidence income are self-correcting 22. Average product of labour =: total output/total number of workers 23. What does a production function describe?: the relationship between theamount of output produced and the amount of input used to produce it 24. What is diminishing average product of labour?: Where as more labour isused in a given production process, the average product of labour falls 25. What can diminishing average product of labour be caused by? example- : More labour devoted to a fixed quantity of land or more (inferior) land bought intocultivation 26. malthus's model: diminishing average product of labour and increased livingstandards created population increase which both led to Malthusian trap 27. what variables stay constant in the malthus