Question

1) Economic growth occurs when

		there is an increase in the inflation rate.
		there is a decrease in the unemployment rate.
		we discover a sleeping worker who is forced to go back to work.
		there is an increase in the amount of capital.

2)

Saving is important for economic growth

		because it increases investment spending.
		because we increase our consumption immediately.
		because it reduces investment spending.
		because our standard of living will decrease.

3)

1. The circular flow of income shows

   		goods and services flowing in one direction and money payments in the other direction.
   		goods, services, and money payments flowing in the same direction.
   		goods and money payments flowing in one direction and services flowing in the opposite direction.
   		goods flowing in one direction and services and money payments flowing in the other direction. 4) The real rate of interest is
   		a value that depends upon the stock market.
   		the interest rate observed in the market minus the anticipated inflation rate.
   		not influenced by inflation.
   		the interest rate observed in the market

Answer 1

1. Economic growth occurs when there is a decrease in the unemployment rate.

Reason = Economic growth actually refers to an increase in GDP, which in turn leads to by job creation and more employment or in other words decrease in the unemployment rate. Increase in GDP means increase in production capacity and country able to produce more goods and services when more people hired and employed.

2. Saving is important for economic growth because it increase investment spending.

Reason = Saving and investment have direct relation. More saving means more investment in capital leads to more economic growth. In other words we can say that higher saving can help finance higher levels of investment and boost productivity over the the long term.

3. The cricular flow of income show goods and services in one direction and and money payment in the other direction.

Because Circular flow diagram as a flow of income going in one direction and expenditure on goods, services and resources going in the opposite direction.

4. The real rate of interest is the interest rate observed in the market minus the anticipated inflation rate.

Reason = Real rate of interest = Nominal interest rate - inflation.