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Unit notes and practice questions

Grade 10 Economics unit 6: Economic Growth

Everything here is for unit 6 of the Grade 10 Economics textbook: what the chapter covers, the short notes, practice questions with their answers, and the lesson video where one exists.

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5
Cards
10
Practice questions on unit 6
114–133
The textbook pages for unit 6

What unit 6 covers

  1. 1.Macroeconomic Variables
  2. 2.Definition and Measurement of Economic Growth
  3. 3.Sources of Economic Growth
  4. 4.The Weaknesses of Using GDP /GDP Per Capita
  5. 5.The Business Cycle and Its Phases

Short notes for unit 6

The cards filed under this chapter on the Grade 10 Economics page. Open one at a time.

g=RGDPt−RGDPt−1RGDPt−1×100g = \frac{\text{RGDP}_t - \text{RGDP}_{t-1}}{\text{RGDP}_{t-1}} \times 100
gg
Economic growth rate of Real Gross Domestic Product%
RGDPt\text{RGDP}_t
Real GDP in the current year tUSDUSD
RGDPt−1\text{RGDP}_{t-1}
Real GDP in the previous year t-1USDUSD

When you use it

Use this formula to calculate the percentage change in real national output from one year to the next.

Watch out

Always divide by the base year real GDP (t-1), not the current year real GDP (t).

Drafted from Grade 10 Economics, pages 114-133, then checked twice before it went up

When you use it

Use when distinguishing between output expansion and broad institutional transformation.

Watch out

Do not treat them as synonyms: growth is merely a necessary condition for development, not a sufficient condition.

Drafted from Grade 10 Economics, pages 114-133, then checked twice before it went up

Per Capita RGDPt=RGDPtPopulationt\text{Per Capita RGDP}_t = \frac{\text{RGDP}_t}{\text{Population}_t}
Per Capita RGDPt\text{Per Capita RGDP}_t
Real GDP per capita in year tUSD/person\text{USD/person}
RGDPt\text{RGDP}_t
Total Real GDP in year tUSDUSD
Populationt\text{Population}_t
Total population in year tperson\text{person}

When you use it

Use this formula to calculate average economic output per person, which indicates the standard of living.

Watch out

Per capita GDP is an average and does not reflect income inequality or non-market activities.

Drafted from Grade 10 Economics, pages 114-133, then checked twice before it went up

PhaseEconomic Characteristics
Boom / PeakRising demand, prices, investment, employment, and incomes.
RecessionCuts in investment and employment; falling incomes, demand, and prices.
Depression / Slump / TroughLowest business confidence; investment, output, and prices hit bottom.
Recovery / ExpansionSustained upward movement in investment, output, employment, and prices.

When you use it

Use this to describe the four sequential stages of macroeconomic fluctuations.

Watch out

Business cycle fluctuations are irregular and unpredictable, not regular or evenly timed cycles.

Drafted from Grade 10 Economics, pages 114-133, then checked twice before it went up

Income CategoryGNI Per Capita Range (2008 USD)
Low-income countries (LICs)<=$975<=\$975
Lower middle-income countries (LMCs)$976−$3,855\$976 - \$3{,}855
Upper middle-income countries (UMCs)$3,856−$11,906\$3{,}856 - \$11{,}906
High-income countries>=$11,907>=\$11{,}907

When you use it

Use this classification to categorize economies based on their gross national income per capita levels.

Watch out

Do not confuse lower middle-income cutoff ($976 to $3,855) with upper middle-income cutoff ($3,856 to $11,906).

Drafted from Grade 10 Economics, pages 114-133, then checked twice before it went up

Practice questions on unit 6

10 multiple-choice questions written against this chapter, each with its answer and the reason. Try one before you open the answer.

Question 1

What is the current account balance (trade balance) of a country equal to?

  1. A.Exports minus Imports
  2. B.Imports minus Exports
  3. C.Real GDP divided by Population
  4. D.Total Output plus Inflation
Show the answer and why

Answer: A Exports minus Imports

Why

According to the textbook, current account or trade balance is calculated as Exports (X) - Imports (M).

Question 2

A farmer in a rural area who is temporarily unable to farm during the drought period is experiencing which type of unemployment?

  1. A.Frictional unemployment
  2. B.Seasonal unemployment
  3. C.Structural unemployment
  4. D.Cyclical unemployment
Show the answer and why

Answer: B Seasonal unemployment

Why

Seasonal unemployment is caused by the time of year, such as drought time for farmers.

Question 3

Which phase of the business cycle is reached when business confidence is at its lowest and investment, employment, output, and prices touch the bottom?

  1. A.Depression or slump
  2. B.Prosperity or boom
  3. C.Recovery
  4. D.Expansion
Show the answer and why

Answer: A Depression or slump

Why

Depression (or slump/trough) is the stage where business confidence is lowest and economic variables like investment, employment, and prices hit the bottom.

Question 4

Which determinant of productivity refers to the knowledge and skills that workers acquire through education, training, and experience?

  1. A.Physical capital per worker
  2. B.Human capital per worker
  3. C.Natural resources per worker
  4. D.Technological knowledge
Show the answer and why

Answer: B Human capital per worker

Why

Human capital is the term economists use for the skills and knowledge that workers gain from schooling, training, and work experience.

Question 5

Suppose Ethiopia had a Real Gross Domestic Product (RGDP) of 100 billion birr in year 1 and 110 billion birr in year 2. What was the economic growth rate?

  1. A.5%
  2. B.10%
  3. C.15%
  4. D.20%
Show the answer and why

Answer: B 10%

Why

The formula for the growth rate is [(RGDPt - RGDPt-1) / RGDPt-1] * 100%. Here: [(110 - 100) / 100] * 100% = 10%.

Question 6

Under the World Bank classification system based on 2008 data, low-income countries (LICs) are defined as having a per capita gross national income of:

  1. A.$975 or less
  2. B.Between $976 and $3,855
  3. C.Between $3,856 and $11,906
  4. D.$11,907 or more
Show the answer and why

Answer: A $975 or less

Why

The textbook notes that low-income countries (LICs) are defined as having a per capita gross national income in 2008 of $975 or less.

Question 7

Which of the following statements correctly distinguishes economic growth from economic development?

  1. A.Economic growth is a necessary but not a sufficient condition for economic development.
  2. B.Economic development is a subset of economic growth.
  3. C.Economic growth requires progressive changes in political and social structures, while development only measures GDP.
  4. D.Economic development can easily occur without any economic growth taking place.
Show the answer and why

Answer: A Economic growth is a necessary but not a sufficient condition for economic development.

Why

Growth is a subset of development. Economic growth can happen without development, but economic growth is a necessary but not sufficient condition for economic development.

Question 8

Which of the following is excluded from Gross Domestic Product (GDP) because it takes place outside market transactions?

  1. A.Child care provided by parents at home
  2. B.Child care services provided in paid day-care centers
  3. C.A meal cooked and sold at a restaurant in Addis Ababa
  4. D.Teff harvested and sold in an open market
Show the answer and why

Answer: A Child care provided by parents at home

Why

GDP uses market prices and leaves out goods and services produced at home for personal family use, such as parental child care.

Question 9

Long-run economic growth is typically accompanied by structural changes in the economy. How is this structural transformation characterized?

  1. A.A fall in the share of agriculture in both GDP and workforce, and a rise in industry and services
  2. B.An increase in the agricultural workforce and a decline in factory production
  3. C.A complete shift from manufactured goods to primary agricultural exports
  4. D.A decrease in urban employment and an increase in subsistence farming
Show the answer and why

Answer: A A fall in the share of agriculture in both GDP and workforce, and a rise in industry and services

Why

Structural changes are characterized by industrialization: a fall in the share of agriculture in both GDP and the workforce, and a corresponding increase in the share of industrial and service sectors.

Question 10

According to researchers Kefer and Knack (1997) in the textbook, why have poor countries failed to catch up with rich countries?

  1. A.Deficient institutions such as corruption, weak rule of law, and contract repudiation
  2. B.An absolute lack of natural resources such as land and rivers
  3. C.Having domestic saving rates that are too high for their financial systems
  4. D.Rapid technological advances that lowered the productivity of capital
Show the answer and why

Answer: A Deficient institutions such as corruption, weak rule of law, and contract repudiation

Why

Kefer and Knack argued that deficient institutions in poor countries (lack of institutional quality, corruption, lack of rule of law) prevent them from catching up with wealthy nations.

The app holds 12 questions on this unit, marked as you go. These are the first 10.

The textbook pages for unit 6

Unit 6 runs from page 114 to page 133 of the Ministry of Education edition.

Ministry of Education edition, English, 193 pages

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All Grade 10 Economics short notes

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