Market Failures, Taxes, and Subsidies: Crash Course Economics

The video introduces macroeconomics, focusing on GDP, unemployment, and inflation as key economic indicators. It explains the importance of understanding these concepts to make informed decisions. The video also discusses the business cycle, the role of government in economic stability, and the limitations of GDP as a measure of economic health. It concludes with a preview of future topics.

What is the primary focus of macroeconomics?

• Personal finance and budgeting

• Business management strategies

• Economic aggregates and national income

• Individual consumer behavior

Which of the following is NOT included in GDP calculations?

• Government spending

• Used car sales

• Consumer spending

• New car sales

What does a decrease in real GDP for two consecutive quarters indicate?

• Deflation

• Economic boom

• Recession

• Inflation

Which type of unemployment occurs when people are between jobs?

• Cyclical unemployment

• Structural unemployment

• Frictional unemployment

• Seasonal unemployment

What is the natural rate of unemployment?

• Only cyclical unemployment

• Unemployment due to seasonal changes

• 0% unemployment

• Only frictional and structural unemployment

Why is excessive deflation considered harmful to the economy?

• It leads to higher interest rates

• It increases consumer spending

• It discourages spending and increases unemployment

• It causes rapid economic growth

What is the business cycle?

• A cycle of economic expansion and contraction

• A period of sustained economic growth

• A phase of constant unemployment

• A continuous increase in GDP

Which component is NOT part of GDP?

• Government spending

• Business investment

• Personal savings

• Consumer spending

What role can the government play during a recession?

• Increase taxes

• Decrease spending

• Increase spending or cut taxes

• Restrict consumer spending

What is a potential drawback of government intervention in the economy?

• Increased consumer spending

• Higher employment rates

• Accumulation of debt

• Stable prices