The Nature and The Classification of an Economy — Flashcards

Answer

An economy is the broad institutional framework within which economic interaction takes place in a country. It includes the devices and institutions through which economic choices are made and scarce …

Answer

Countries classify economies to understand their level of development and the nature of their economic system. Common classifications include developed and developing economies, and capitalist, social…

Answer

Economies are classified in two main ways: by the degree of economic development, and by the nature of the economic system. The first gives developed and developing economies, while the second gives c…

Answer

A developed country is a country with high real per capita income. Because of this, people usually enjoy a higher standard of living. Examples include USA, Canada, Australia, New Zealand, Japan, the W…

Answer

A developing or underdeveloped country is a country with low real per capita income but with the potential for development. It is growing, not stagnant, and development has already started in such eco…

Answer

Per capita real income is useful, but it is not a perfect measure of development because it does not show income distribution, poverty, unemployment, or quality of life such as education and health.

Answer

The World Bank classifies countries into low income, middle income, and high income countries on the basis of per capita GNI. Low income countries have per capita GNI of American $1135 or less, middle…

Answer

Low income and middle income countries together are popularly described as developing economies or underdeveloped economies. High income countries are popularly called developed countries.