MYP Individuals &amp; Societies Economic Decline Questionbank

How can sustained economic decline lead to a cycle of lower long-term development in a state?

By eliminating the wealth gap between the rich and the poor

By forcing the state to modernize its infrastructure to attract investment

By reducing government revenue needed to fund essential services like health and education

By increasing the literacy rate through lower costs of living

Question 2

Why might a sustained decrease in the price level (deflation) be considered harmful for workers?

It can reduce business revenues, potentially leading to lower wages or job cuts

It causes an immediate shift of the Aggregate Supply curve to the right

It automatically increases the purchasing power of all wages

It leads to a mandatory increase in income taxes

Question 3

In the labour market, why does unemployment typically rise during a period of economic decline?

The demand for labour shifts left because firms cannot sell enough output

Government legislation prevents firms from hiring more than a certain number of workers

Workers collectively decide to stop working to protest low wages

The supply of labour increases because people need more money

Question 4

In the context of the 2008–09 Financial Crisis, what were 'derivatives'?

Direct loans made by the World Bank to developing nations

New currencies created to replace the US dollar

Financial instruments created by repackaging mortgage and consumer debts

Government bonds used to fund social programs

Question 5

How do internal factors like corruption and inequality typically interact with external pressures to deepen an economic decline?

They provide a buffer that prevents external shocks from affecting the economy

They cause an immediate shift from a trade deficit to a trade surplus

They weaken institutional resilience, making the state more vulnerable to external shocks