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Frage 1 Bericht
If government in a fiscal year has its revenue receipts less than the expenditure, such country is having
Antwortdetails
When a government has its revenue receipts less than the expenditure in a fiscal year, the country is experiencing a deficit budget. Here's a simple explanation:
Revenue receipts are the funds government receives, mainly from taxes and other sources like fees, interests, etc.
Expenditure refers to the total amount of money the government spends on various needs like infrastructure, education, defense, welfare programs, and salaries.
If the money received (revenue receipts) is less than the money spent (expenditure), it indicates that the government is spending more than it is earning. This excess expenditure generates a gap which is known as a deficit.
To address this deficit, governments might need to borrow money or reduce spending to balance their finances in the future. Hence, when expenditure surpasses revenue, it results in a deficit budget.
Frage 2 Bericht
If the price of commodity X rises and consumers shift to commodity Y, then commodities X and Y are
Antwortdetails
If the price of commodity X increases and consumers start purchasing commodity Y instead, then commodities X and Y are considered substitutes. Substitutes are goods that can be used in place of one another; when the price of one goes up, consumers naturally shift their demand to the other because it serves a similar function or purpose.
Consider an example: if the price of coffee goes up, people might start drinking tea instead if tea serves as a similar alternative for their morning beverage needs. In this scenario, coffee and tea are substitutes. Therefore, the relationship between these goods is defined by consumers' ability to consider one in place of the other based on price.
In summary, when consumers replace their consumption of one good with another due to price change, the goods in question are substitutes.
Frage 3 Bericht
The following are type of business organization EXCEPT
Antwortdetails
In the context of business organizations, the term that stands out as not fitting among the others is **Entrepreneurship**.
To understand why, let's briefly define each term:
Thus, the odd one out is Entrepreneurship, because it describes the activity of establishing and managing a business rather than being a structured form of business organization like the others mentioned.
Frage 4 Bericht
What add funds to the circular flow?
Antwortdetails
The concept of the circular flow of income represents how money moves within an economy among consumers, businesses, and various markets. In this circular flow, three key elements can either add to or reduce the flow of funds: **leakages** and **injections**.
Leakages are the flows of money that exit the circular flow. They reduce the amount of money that circulates within the economy. Common leakages include savings, taxes, and imports. For instance, when individuals save money instead of spending it, that money is not used to purchase goods or services, thus exiting the circular flow.
Injections, on the other hand, are the activities or financial inflows that add funds to the circular flow of income, ensuring continued economic activity. They increase the total amount of money circulating in the economy. These include investment, government spending, and exports.
The expenditure approach is a method for calculating a nation's Gross Domestic Product (GDP) by considering the total expenditure on the nation's final output of goods and services in a year. While this approach helps to measure the size of the economy, it is not directly responsible for adding funds to the circular flow. Instead, it relies on the activities of consumption, investment, government spending, and net exports.
In conclusion, it is the concept of injection that directly adds funds to the circular flow, stimulating economic activities and growth by multiplying the effects of initial spending through the economy.
Frage 5 Bericht
What is the median term in the distribution below; 14, 13 29,15,13,17,12.
Antwortdetails
To find the median of a set of numbers, the first step is to arrange the numbers in ascending order (from smallest to largest).
The given numbers are: 14, 13, 29, 15, 13, 17, 12.
Arrange them in ascending order: 12, 13, 13, 14, 15, 17, 29.
The median is the number that appears in the middle of this ordered list. Since there are 7 numbers in this list, the middle number is the fourth one.
In the ordered sequence 12, 13, 13, 14, 15, 17, 29, the median is 14.
Frage 6 Bericht
From the diagram below, moving from point A to B and from B to c is due to
Antwortdetails
Opportunity cost is a key concept in economics that refers to the value of the next best alternative forgone when making a choice. It plays a significant role in determining the downward shift in the production possibilities curve (PPC).
The PPC represents the different combinations of two goods or services that an economy can produce given its limited resources and technology. It illustrates the trade-offs that occur when resources are allocated between the production o different goods.
When there is a downward shift or inward shift in the PPC, it indicates a decrease in the economy's productive capacity. This shift can be influenced by several factors, including changes in resource availability, technology, or the efficiency of resource allocation. However, opportunity cost can help explain how these factors lead to a downward shift.
Frage 7 Bericht
When an economy is having a balance of payment surplus the best alternative opened to it is to
Antwortdetails
When an economy is experiencing a balance of payments surplus, it means that the country is exporting more goods, services, and capital than it is importing. Essentially, there is more money flowing into the country than out of it. In such situations, one of the most viable actions to take is to increase its foreign reserves.
Here's why increasing foreign reserves is often the best option:
Promoting imports, while it can help reduce the surplus by encouraging money to flow out of the country, may not always be the best course of action and depends on the country's economic goals and import needs. Borrowing from abroad is generally not necessary when the country has a surplus. Devaluing the currency is certainly not favorable in the context of a surplus as it can create inflationary pressures and reduce purchasing power internationally.
Frage 8 Bericht
Which of the following is not emphasized in a product possibility curve?
Antwortdetails
The Production Possibility Curve (PPC), also known as the Production Possibility Frontier, is a graphical representation that illustrates the concept of scarcity, trade-offs, and opportunity cost. It shows the different combinations of two goods or services that an economy can produce given its finite resources and technology.
The factors typically highlighted by a PPC are as follows:
However, a point that is not emphasized within a PPC is:
Thus, the concept that is not highlighted in a PPC is economic development.
Frage 9 Bericht
Which of these is NOT associated with the problem of internal trade?
Antwortdetails
Market trade unions are not typically associated with the problem of internal trade. Trade unions are typically formed b workers or employees to protect their rights, negotiate better working conditions, and advocate for their interests. While trade unions can have an impact on labor markets and industrial relations, they are not directly linked to the challenges or problems specifically related to internal trade.
Frage 10 Bericht
A major characteristics of a firm operating at a long-run equilibrium position is that
Antwortdetails
In the long-run equilibrium position for a firm, **all costs are variable**. This is because the long-run is a period sufficiently long for firms to adjust all factors of production. They can expand or reduce their capacity, acquire new technology, or even enter and exit industries depending on market conditions.
Unlike in the short-run where some factors (like buildings and machinery) are **fixed** because they cannot be changed immediately, in the long-run, firms have the flexibility to alter all their inputs. This means that firms can choose the optimal scale of operation where the average cost of production is minimized, leading to a position where profits are maximized if the market structure allows.
So, in summary: In the long-run, a firm operates where **all costs are variable**, allowing complete adjustment to maximize efficiency and competitive position in the market.
Frage 11 Bericht
An industry engaged in the extraction of raw materials and its conversion into semi-finished goods is called industry.
Antwortdetails
Processing involves transforming raw materials or inputs into more refined or semi-finished products. This can include various stages of production, such as refining, manufacturing, assembly, or other forms of processing.
The processing industry plays a vital role in taking raw materials from their natural state and converting them into products that can be used for further processing or consumed by end-users. This industry typically adds value to the rav materials by applying different processes, technologies, and expertise.
NOTE: Although manufacturing is involved in the production of goods, it does not specifically address the extraction of raw materials. Manufacturing encompasses a broader range of industries involved in producing finished goods from raw materials, components, or parts.
Frage 12 Bericht
The formular used by the Expenditure approach to calculate National income is
Antwortdetails
The expenditure approach is a common method used to calculate the national income, specifically the Gross Domestic Product (GDP) of a country. This approach sums up all expenditures or spending in the economy.
The correct formula for the expenditure approach is: Y = C + I + G + (X - M), where:
Putting it all together, this formula helps to calculate the total economic activity within a country by summing up consumption, investment, government spending, and net exports, giving a comprehensive picture of the national income.
Frage 13 Bericht
If two bags of rice were sold for #1,250 a month ago and two weeks later, the same amount was used to procure one bag. This simply means that the value of money is
Antwortdetails
In this scenario, the price of rice has increased relative to the amount of money (N1,250) that could be used to purchase it. Initially, N1,250 could buy two bags of rice, but after two weeks, the same amount can only buy one bag.
This decrease in purchasing power demonstrates that the value of money has declined. In other words, the same amount of money can now buy fewer goods or services than before. This situation is often referred to as inflation, where the general price level of goods and services rises over time, reducing the purchasing power of money.
Frage 14 Bericht
Which of the following is NOT associated with minimum price legislation?
Antwortdetails
Minimum price legislation is a policy where the government sets a lower price limit for certain goods or services, meaning they cannot be sold below this set price. It is often intended to protect producers, ensuring they receive fair compensation and maintaining industry standards.
When a minimum price is set above the equilibrium price, it typically leads to several economic effects:
Excess demand is NOT associated with minimum price legislation. Excess demand occurs when the price is set too low, leading to a situation where the quantity demanded exceeds the quantity supplied. This situation is commonly related to maximum price controls, not minimum price legislation.
Frage 15 Bericht
MPC + MPS equals
Antwortdetails
The terms MPC and MPS are concepts from economics that describe how households make spending and saving decisions out of their income. Let's break these down for a better understanding:
The sum of MPC and MPS must equal 1 because the additional income can only be spent or saved, meaning there aren’t any other alternatives for allocating this extra income. Therefore, mathematically, we express it as:
MPC + MPS = 1
In a closed economy model, the whole of any extra income is divided into consumption and saving, thereby making 1 the correct answer. So, whenever income changes, whatever portion is not spent (MPC) is saved (MPS), summing it up to one.
Frage 16 Bericht
When combination of two goods which a consumer derive equal satisfaction is plotted on a graph, the graph is known as
Antwortdetails
The combination of two goods which a consumer derives equal satisfaction from is plotted on a graph known as an indifference curve. This graph represents all the different combinations of two goods that provide the consumer with the same level of utility or satisfaction.
For instance, if a consumer is equally happy with either 3 bananas and 2 apples or 2 bananas and 3 apples, both points will lie on the same indifference curve.
The reason it's called an indifference curve is because the consumer is indifferent between any two points on this curve, meaning they have no preference for one combination over the other since both provide the same level of satisfaction.
Unlike a demand curve which shows the quantity of a good that consumers are willing and able to purchase at various prices, the indifference curve focuses solely on the level of satisfaction from different combinations of goods, without considering their prices directly. It is an essential concept in the study of consumer behavior and helps understand how consumers make choices between different goods.
Frage 17 Bericht
Which of the following is NOT a function of the IMF?
Antwortdetails
The International Monetary Fund (IMF) is an international organization that primarily focuses on ensuring the stability of the international monetary system. Here are some of its core functions:
The statement that is NOT a function of the IMF is "assisting member countries in printing and issuing their currency." The IMF does not assist countries in printing or issuing their currency. This activity is typically managed by each country's own central bank or monetary authority. Thus, this function does not fall under the responsibilities of the IMF.
Frage 18 Bericht
Which of the following is NOT a factor that brings about changes in demand?
Antwortdetails
In economics, a change in demand is influenced by several factors, but one of the options provided is NOT a factor that leads to a change in demand. This factor is the price of the good or service.
Here’s why:
The Price of the Good or Service: When we talk about demand, we focus on a demand curve that represents the relationship between the price of a good and the quantity demanded. A change in the price of the good itself does not shift the demand curve; instead, it results in a movement along the demand curve. Therefore, changes in the price of the good or service itself do not cause a change in demand but rather a change in the quantity demanded.
In contrast, the following factors do cause shifts in the demand curve (change in demand):
A Change in Real Income: When consumers have more or less income, their ability to purchase goods and services changes. If real income increases, consumers can afford to buy more, shifting the demand curve to the right. Conversely, a decrease in real income shifts the demand curve to the left.
Government Policy: Policies such as taxes, subsidies, regulations, or import restrictions can impact consumer purchasing power or the attractiveness of a product, influencing demand. For example, a subsidy on solar panels might increase their demand as they become more affordable.
Increase in Population: An increase in population typically increases demand for various goods and services as more people in the economy need these products, causing a rightward shift in the demand curve.
Frage 19 Bericht
An exceptional demand curve can result from
Antwortdetails
An exceptional demand curve occurs when demand does not follow the typical downward slope from left to right. Instead, the demand curve may slope upward. Let’s consider some scenarios that could lead to this unusual situation.
Increase in Price of Raw Materials: This typically affects the supply side rather than the demand side. When prices of raw materials increase, production costs go up, possibly reducing supply, but not necessarily impacting demand directly. Therefore, this is not usually a reason for an exceptional demand curve.
Change in Taste of Consumer: If consumers suddenly prefer a particular product, they may be willing to buy more even if the price rises. This shift in consumer preferences can lead to an upward-sloping demand curve, reflecting increased demand despite higher prices.
Increase in the Size of the Population: More people can lead to higher overall demand, but each individual’s demand curve typically still slopes downward due to the law of diminishing marginal utility. Therefore, population increase alone generally does not cause an exceptional demand curve.
Expectation of Future Price Increase: When consumers expect prices to rise in the future, they may choose to buy more now to avoid paying higher prices later. This situation can lead to an upward-sloping demand curve as current demand increases with rising prices, due to future price expectations.
In summary, an exceptional demand curve is usually caused by changes in consumer tastes or expectations of future price increases, making current demand behave in an unexpected way compared to the usual downward slope.
Frage 20 Bericht
The bank established to finances project aimed at promoting economic and social development within the African continent is
Antwortdetails
The bank that is primarily dedicated to financing projects aimed at promoting economic and social development within the African continent is the African Development Bank (AfDB).
The African Development Bank (AfDB) was established in 1964 with the main objective to reduce poverty, improve living conditions, and promote economic and social development in African countries. It achieves these goals by providing loans and grants for a variety of development projects and programs across the continent. These projects cover various sectors including infrastructure, education, healthcare, agriculture, and energy.
Unlike purely commercial banks, the AfDB is focused on development projects that may not always have immediate financial returns but are crucial for the sustainable growth and development of African nations. The bank works together with member countries and international partners to mobilize resources and expertise needed to tackle the continent's challenges, often adopting innovative financing solutions tailored to the unique needs of the African context.
Frage 21 Bericht
The act of cultivating land and rearing of animal for man's use is
Antwortdetails
The act of cultivating land and rearing of animals for man's use is known as agriculture.
Agriculture is an activity that involves growing crops and raising animals to provide food, fiber, medicinal plants, and other products used to sustain and enhance human life. It is a vital practice that has been developed over thousands of years, allowing civilizations to flourish by ensuring a stable supply of food and resources. This practice not only involves the cultivation of the land for crops but also includes various other activities such as animal husbandry, which is the breeding and care of farm animals.
Let me explain a bit about the other terms you mentioned:
Thus, the most comprehensive term that covers both the cultivation of land and rearing of animals is agriculture.
Frage 22 Bericht
One of the function of united nation conference on trade and development (UNTAD) is to
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The United Nations Conference on Trade and Development (UNCTAD) is a UN body that focuses on trade and development issues, particularly those affecting developing countries. One of the functions of UNCTAD is to facilitate the transfer of technology from developed to less developed countries. This involves promoting the dissemination and adoption of technology in less developed countries to enhance their productive capacities, economic growth, and development.
UNCTAD recognizes that technology plays a crucial role in bridging the development gap between countries. By facilitating the transfer of technology, UNCTAD aims to enable developing countries to access and utilize advanced knowledge, skills, and technological innovations available in developed countries. This transfer of technology can occur through various means such as technical assistance, capacity building, knowledge sharing, and promoting partnerships between developed and developing countries.
Frage 23 Bericht
The following will occur when maximum price is fixed below the free market price EXCEPT that
Antwortdetails
When a maximum price is fixed below the free market price, it can lead to several outcomes due to the restrictions placed on how high a price can go. Here's a breakdown of what typically happens:
1. **Encouragement of Black Market:** When the price ceiling is lower than what would naturally occur, some sellers may not be willing to sell at the lower price. This may encourage them to sell illegally at higher prices, leading to the emergence of a **black market**.
2. **Excess Demand:** A lower price means that more people can afford the product. Therefore, demand for the product increases, but because producers are not willing to supply more at that low price (since they make less profit), there isn't enough product to meet demand. This creates **excess demand**. People want more of the product than is available.
3. **Excess Supply:** This situation is not a consequence of setting a maximum price below the free market price. **Excess supply** happens when the price is too high, resulting in goods remaining unsold as consumers are not willing to buy at that price. But since in this scenario, the price is kept low, the opposite happens: a shortage, not a surplus.
4. **Rationing of Commodities:** To manage the excess demand and ensure fair distribution since there's a shortage, the government or sellers may need to introduce **rationing**. This means setting limits on how much each individual can purchase to prevent the faster depletion of available goods.
In summary, the statement about **excess supply** is the one that would not occur when a maximum price is fixed below the free market level. Instead, you'll have excess demand. This discrepancy is because the artificially low price discourages producers from supplying more of the good.
Frage 24 Bericht
Economic problem arises as a result of
Antwortdetails
The **economic problem** arises due to the fundamental concept of **scarcity**. In simple terms, scarcity means that the resources available to us are **limited**, while our desires and needs are **unlimited**. This situation forces us to make decisions about how best to allocate our resources efficiently.
Because of scarcity, every choice we make involves a **trade-off**. For instance, if you choose to spend your time studying economics instead of mathematics, you sacrifice the benefits you would have gained from studying mathematics. The concept associated with this scenario is called **opportunity cost**, which is essentially the value of the next best alternative forgone when making a decision.
Furthermore, scarcity leads to the necessity of **choice**. Individuals, businesses, and governments must decide what to produce, how to produce, and for whom to produce. These choices are influenced by the limited resources and the alternatives available.
While **money cost** is often considered in decisions, it is not the root cause of the economic problem. It is a **monetary representation of value** and is used as a tool to navigate scarcity and opportunity cost.
In essence, the **economic problem exists** because we have to make choices about how to use our scarce resources most effectively, and every choice involves an opportunity cost. This continual need to prioritize options is at the very heart of economics.
Frage 25 Bericht
Which of the following is NOT a major role of OPEC in production, and marketing of petroleum?
Antwortdetails
Refining of petroleum products in member countries is NOT a major role of OPEC in the production and marketing of petroleum.
Let me explain why:
In summary, the main roles of OPEC include balancing oil production and prices and ensuring a steady supply, but they do not majorly focus on the refining of petroleum products.
Frage 26 Bericht
The willingness of an individual backed up with purchasing power at a given time is
Antwortdetails
The concept you are referring to is effective demand. Let me explain it to you in a straightforward way:
Demand: Generally, demand refers to the desire or willingness of a consumer to purchase goods or services. However, just having the desire is not enough. Demand becomes impactful only when it is supported with the capability to purchase.
Effective demand: This is more than just a simple desire or demand. It represents the situation where an individual not only wants to purchase a product or service but also has the actual purchasing power to do so. This means they have the money or resources to back up their desire at a given time.
Desire: This term simply denotes a wish or want, without any implication of capability to fulfill it. For instance, many people might desire a luxury car, but not everyone can afford it.
Utility: This is a different concept entirely, referring to the satisfaction or benefit a consumer receives from consuming a product or service. It does not necessarily align with the ability to purchase.
In summary, when discussing the willingness to buy something and having the funds ready at that moment, it's referred to as effective demand because it combines the desire with the actual capacity to fulfill that desire.
Frage 27 Bericht
In the event of bankruptcy, owners of joint-stock companies lose
Antwortdetails
When a joint-stock company goes bankrupt, the owners or shareholders of the company only lose the capital they invested in that company. This is because joint-stock companies have a feature known as **limited liability**.
Limited liability means that shareholders are only responsible for losses up to the amount of money they invested in purchasing shares of the company. Therefore, in a bankruptcy situation, they **lose only the capital invested**, and their personal or private assets (like cars, houses, or bank accounts) are protected and not at risk. They are not liable beyond their shareholding, hence they do not lose their private properties or any future dividends they were expecting.
This feature of limited liability is very important as it encourages people to invest in joint-stock companies without the fear of losing their personal wealth.
Frage 28 Bericht
The middle value of an array figure arranged in descending order is referred to as the
Antwortdetails
The middle value of an array of figures arranged in descending order is referred to as the median.
To understand this concept, imagine you have a collection of numbers, and you want to find the one that sits right in the middle when all numbers are lined up from the largest to the smallest (or even from smallest to largest, as the median remains the same).
The median is very useful as a measure of central tendency because it is not affected by extremely large or small values in the dataset, which could skew other measurements like the mean. Thus, it provides a better representation of a typical value within the dataset, especially when dealing with outliers.
Frage 29 Bericht
When an increase in the price of a commodity lead to a fall In the demand for another, the demand for the two commodities are said to be
Antwortdetails
Competitive demand refers to a situation where two or more goods are seen as substitutes for each other. When the pric of one commodity increases, consumers tend to shift their demand towards the substitute commodity, resulting in a decrease in the demand for the original commodity.
For example, if the price of coffee increases significantly, some consumers may choose to switch to tea as a substitute. A: a result, the demand for coffee decreases while the demand for tea increases.
Frage 30 Bericht
Which of the following is NOT included in-measuring the National income through the income approach?
Antwortdetails
When measuring national income using the **Income Approach**, the focus is on summing up all the **incomes earned** by individuals and businesses in an economy for providing goods and services. This typically includes wages, profits, rents, and interest received. Let's examine each option:
Frage 31 Bericht
The satisfaction derived from the consumption of a commodity is referred to as
Antwortdetails
The satisfaction derived from the consumption of a commodity is referred to as utility. To explain this concept further, let's break it down:
Utility is an economic term that describes the pleasure, happiness, or satisfaction a consumer gets from consuming goods and services.
Here’s why it is the correct term:
In summary, whenever we talk about the satisfaction from using or consuming goods, we are discussing the concept of utility.
Frage 32 Bericht
Economics problems arise in all societies because
Antwortdetails
Economics problems arise in all societies primarily because resources are not in adequate supply. This is known as the fundamental economic problem of scarcity. In every society, there are limited resources but unlimited wants and needs. These resources include things like land, labor, and capital, which are necessary for producing goods and services. Since we do not have enough of these resources to satisfy everyone's desires, we face choices about how to allocate them efficiently.
The issue of scarcity leads to other economic problems such as deciding what to produce, how to produce it, and for whom it should be produced. These decisions are made by assessing opportunity costs and considering how to make the best possible use of the limited resources available.
While factors such as lack of proper planning or mismanagement by leaders can exacerbate economic problems, they are not the root cause. The core issue remains the limited availability of resources, compelling societies to prioritize and decide how best to meet the needs of their population.
Frage 33 Bericht
The following are the objectives of agricultural policies in Nigeria EXCEPT
A. provision of food
B. provision of agricultural raw materials to industrial sectors
C. increasing prices of agricultural Inputs
D. creation of rural employment
Antwortdetails
Nigeria's agricultural policies are fundamentally designed to enhance and support the agricultural sector for the overall benefit of its economy and citizens. Let's analyze the objectives given:
Therefore, the statement that does not align with the typical objectives of agricultural policies in Nigeria is the increasing prices of agricultural Inputs. Instead, policies are often geared towards making inputs more affordable to support agricultural growth.
Frage 34 Bericht
The use of tax and expenditure policy to regulate the economy is known as
Antwortdetails
The use of tax and expenditure policy to regulate the economy is known as fiscal policy.
Fiscal policy refers to the government's use of its spending levels and tax rates to influence a nation's economy. It is primarily the responsibility of the government to adjust its spending and tax rates to either promote economic growth or control inflation. By doing so, the government aims to achieve macroeconomic objectives such as controlling inflation, reducing unemployment, and achieving economic growth.
There are two main types of fiscal policy:
In summary, fiscal policy is crucial because it directly impacts the economy by influencing the level of aggregate demand through changes in government spending and taxation.
Frage 35 Bericht
A market situation with few sellers and many buyers is called
Antwortdetails
The market situation you are referring to is called an oligopoly.
To put it simply, an oligopoly is a market structure where there are only a few sellers, or producers, who dominate the market, while there are many buyers. This creates a situation where the few sellers have significant control over the prices and market dynamics.
This structure is different from a perfect competition, where there are many sellers and buyers, with no single seller having significant market power. It is also different from a duopoly, which specifically refers to exactly two sellers.
The presence of a small number of sellers in an oligopoly leads to competitive strategies where the actions of one seller can influence the actions of others. This often results in strategic collaboration or competition, which affects prices and product offerings.
Frage 36 Bericht
Persistent fall In the general price level is known as
Antwortdetails
A persistent fall in the general price level is known as deflation.
To understand this better, let's break it down:
Hence, when we say "persistent fall in the general price level," we are accurately describing deflation.
Frage 37 Bericht
The main disadvantages of deflationary policies is
Antwortdetails
Deflationary policies refer to economic strategies aimed at reducing inflation and stabilizing prices. However, these policies can also have several disadvantages that can negatively impact an economy.
One major disadvantage of deflationary policies is unemployment in the country. These policies often involve reducing the money supply or increasing interest rates. When the money supply is reduced, businesses may have less access to credit and may experience decreased consumer spending. This can lead to lower production and, consequently, job cuts, increasing unemployment.
Deflationary policies may also lead to a decrease in investments, as higher interest rates make borrowing more expensive. Companies might delay or reduce their investment plans, creating a ripple effect that dampens economic growth and job creation. As more people are unemployed, there is less consumer spending, which can further exacerbate economic stagnation.
On the other hand, while these policies could potentially lead to an improved standard of living in the long run by stabilizing prices, the immediate term is often marked by challenges. These policies are designed to control costs; however, the path to reaching that stability can be quite turbulent.
In summary, the main disadvantage of deflationary policies is their potential to increase unemployment and dampen economic growth, despite their goal of stabilizing the economy.
Frage 38 Bericht
In the long-run, a firm must shut down if its average revenue is
Antwortdetails
In the long-run, a firm must shut down if its average revenue is less than its average variable cost. This is because the firm is unable to cover even its variable costs, which are the costs it incurs when it produces any output at all. Let me explain further:
To put it simply, if average revenue is less than average variable cost, the firm can't sustain itself in the long-run, and shutting down is a rational decision.
Frage 39 Bericht
Which of the following NOT among the objectives of OPEC?
Antwortdetails
When analyzing the objectives of OPEC (Organization of the Petroleum Exporting Countries), it is important to look at the core goals that this organization typically aligns with:
1. To stabilize the price of oil in the world market: This is indeed one of the primary objectives of OPEC. By coordinating the oil production levels among its members, OPEC strives to maintain oil price stability in the global market.
2. To stabilize the revenue from oil to producing countries: Another key objective of OPEC includes ensuring consistent and fair revenue for its oil-producing member countries. By influencing oil prices and production levels, OPEC helps in maintaining stable revenues for these nations.
3. To make sure that oil flows to all the consuming countries: Ensuring the continuous supply of oil to consuming countries is a goal aligned with OPEC's efforts to balance supply and demand for economic and energy stability worldwide.
4. To establish petroleum refineries in all member states: This is NOT among the objectives of OPEC. OPEC does not focus specifically on establishing petroleum refineries in all its member states. The organization's primary focus is on coordinating and unifying the petroleum policies among its member countries, not on the physical establishment of refineries.
Frage 40 Bericht
Under perfect competition, a profit maximizing firm will hire labour up to the point where the last unit of labor adds
Antwortdetails
Under perfect competition, a profit-maximizing firm will hire labor up to the point where the marginal revenue product of labor (MRP) is equal to the wage rate. MRP represents the additional revenue generated by adding one more unit of labor.
Since the firm aims to maximize profits, it will continue hiring labor until the MRP is greater than or equal to the wage rate. At this point, the last unit of labor hired contributes more to total revenue than to total cost, resulting in increased profits for the firm.
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