Category: Interview Questions
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- Deficit Financing: Govt borrows/prints money to cover spending > revenue.
- Public Debt: Accumulated borrowings by govt over time.
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- Frictional: Short-term between jobs.
- Structural: Due to mismatch of skills.
- Cyclical: Due to economic downturns.
- Seasonal: Linked to time of year (e.g., agriculture).
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- Fiscal Policy: Govt spending & taxation (controlled by government).
- Monetary Policy: Money supply & interest rates (controlled by central bank).
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- Nominal GDP = Measured at current prices (includes inflation).
- Real GDP = Adjusted for inflation (better for comparison).
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- GDP = Total market value of goods & services in a country.
- Limitations:
- Doesn’t measure inequality.
- Doesn’t account for informal/black market.
- Doesn’t show environmental damage.
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- Demand-pull: Excess demand in economy.
- Cost-push: Rising costs of production.
- Monetary: Excess money supply.
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- PED = % change in demand / % change in price.
- Helps businesses decide pricing strategies.
- Elastic goods → consumers sensitive to price.
- Inelastic goods → consumers not sensitive.
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- The point where demand = supply.
- At this price, no surplus or shortage exists.
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- Price of the good
- Cost of production (wages, raw materials)
- Technology improvements
- Government taxes & subsidies
- Future expectations
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- Price of the good
- Income of consumers
- Prices of substitutes & complements
- Tastes & preferences
- Future expectations