Question

1- Describe two of the following terms/concepts. (FOCUS ON ORIGINALITY and being SUBSTANTIVE) Scarcity 2-Describe two of the following terms/concepts. (FOCUS ON ORIGINALITY) Aggregate demand Aggregate supply curve Economic fluctuations 3-Describe two of the following terms/concepts. (FOCUS ON ORIGINALITY) Labor productivity Developing countries Industrial market countries 4-Describe two of the following terms/concepts. (FOCUS ON ORIGINALITY) Consumer price index or CPI Disposable income (DI) Net exports

Answer 1

1) only one term is given here

Scarcity--A commodity may have demand in the market but its supply may be less compared to the demand.Scarcity arises because of unlimited human wants and limited resources.In order to meet human needs ,economic resources should be managed properly.So it is the gap between unlimited wants and limited resources.

2)Aggregate demand curve-The total spending of goods and services in an economy at each price level is AD.The components of AD areC+I+G+X-M where C is consumption,I is investment,G is government spending and X-M is exports minus imports.The AD curve has a steep slope downward.This shows that higher price reduce aggregate demand.

Aggregate supply curve-Firms produce and sell goods. The amount of goods firms produce and sell in totality is known as Aggregate supply.This is the short run supply curve and slopes upward .In the short run this curve shows positive relation between price and real GDP.It shows the amount of goods firms are likely to produce and sell.

3) Labour productivity-This means the output that each worker is able to produce in an hour in comparison to what he earns in an hour.This is used to measure the efficiency in firms which use labor intensive technique.It is an integral part of total cost.Factors like skill ,ability ,motivation influence labor productivity.It is measured by the formula-output per period divided by number of employees at work.

Developing country-Developing country depend more on agriculture and is less industrialised . Here human development is less due to lack of educational facilities,poor health conditions,poor infrastructure etc.Here GDP per capita is less and there is widespread poverty.There is no family planning and population is high. There is poor governance.

4)Consumer price index-Every household consumes a number of goods.CPI is used to measure the price level changes of number of goods and services purchased by the households.Percentage change in CPI is used to measure inflation.This index is computed monthly or quarterly.The index is referred to a period known as base year.

Net exports mean exports minus imports.It is used to calculate GDP in an economy.Net exports may be positive or negative depending on whether export is more or import is more.Thus it is also known as balance of trade.If the country has weak currency ,there will be positive net exports and if it has strong currency there will be negative net exports.This is because in weak currency,exports are cheap and in strong currency exports are expensive.