14."Market Price"

What role do prices play in all economic markets?

Prices play an important role in all economic markets. If there were no price system, it would be impossible to determine a value for any goods or services. In a market economy prices act as signals. A high price, for example, is a signal for producers to produce more and for buyers to buy less. A low price is a signal for producers to produce less and for buyers to buy more. Prices serve as a link between producers and consumers. Prices, especially in a free market system, are also neutral. That is, they favour neither the producer nor consumer.

What is one of the strengths of a free enterprise market economy? This flexibility to absorb unexpected «shocks» is one of the strengths of a free enterprise market economy.

What does the term "price" denote in economics?

In economics, the term «price» denotes the consideration in cash (or in kind) for the transfer of something valuable, such as goods, services, currencies, securities, the use of money or property for a limited period of time, etc.

What two important functions do prices perform?

Prices perform two important economic functions: they ration scarce resources, and they motivate production.

What is exchange rate?

exchange rate is the price of one currency in terms of another

15. "Labour"

How many categories of labour are known?

There are four major categories of labour that are based on the general level of skills needed to do any kind of job. These categories are unskilled, semiskilled, skilled and professional or managerial

What is necessary for any country to grow? For any country is necessary to grow quantity and quality labour force.

What is labour in economic theory? is any work undertaken in return² for a fixed payment.

What is traditional theory of wage determination?

The theory that uses the tools of supply and demand to explain differences in wage rates is called the traditional theory of wage determination.

How do supply and demand influence the wage rate? When the level of supply is large in relation to demand, wages generally are low. When the level of supply is low in relation to demand — wages generally are high.

16. "Aggregate Supply"

What is aggregate supply?

aggregate supply — the total amount of goods and services produced by the economy in a given period, usually one year.

What is national income accounting? national income accounting — a system of statistics, that keeps track of production consumption, saving and investment in the economy.

What is GNP?

Gross National Product (GNP)is The most important economic statistics kept in the national income accounts

When will aggregate supply increase?

A number of factors affect an economy’s aggregate supply. Two of these are the quantity of resources used in production and the quality of those resources.  A third factor affecting aggregate supply is the efficiency with which the resources are combined. If they are combined in a productive way, aggregate supply will increase

What help to trace long-run trends in the economy and form new public policies? National income accounting also makes it possible to trace long-run trends in the economy and to form new public policies to improve the economy.