#1
What is economics primarily concerned with?
The study of how societies use scarce resources
ExplanationEconomics focuses on the allocation of limited resources in societies.
#2
What does the law of demand state?
As the price of a good increases, demand decreases
ExplanationThe law of demand observes the inverse relationship between the price of a good and the quantity demanded.
#3
What does 'GDP' stand for, and what does it measure?
Gross Domestic Product; total value of goods produced and services provided in a country during one year
ExplanationGDP is the sum of all goods and services produced in a country in a given period.
#4
What does the term 'inflation' refer to in economics?
An increase in the general price level of goods and services
ExplanationInflation is the rise in the overall price level over time.
#5
Which of the following best describes 'fiscal policy'?
Government policies on taxation and government spending
ExplanationFiscal policy involves government decisions on taxation and spending to influence the economy.
#6
Which of the following best defines 'opportunity cost'?
The cost of not choosing the next best alternative
ExplanationOpportunity cost is the value of the next best alternative forgone when a decision is made.
#7
In economics, what is meant by 'market equilibrium'?
When the quantity demanded equals the quantity supplied
ExplanationMarket equilibrium occurs when supply and demand are balanced.
#8
Which of the following is a characteristic of a perfectly competitive market?
Firms are price takers
ExplanationIn perfect competition, firms accept market prices as given.
#9
Which economic system is characterized by private or corporate ownership of capital goods?
Capitalism
ExplanationCapitalism features private ownership of means of production and free market competition.
#10
What is the 'marginal propensity to consume'?
The ratio of change in consumption to change in income
ExplanationIt quantifies the proportion of additional income spent on consumption.
#11
What is the primary focus of macroeconomics?
The study of economy-wide phenomena
ExplanationMacroeconomics analyzes large-scale economic trends and aggregates.
#12
What is the primary objective of monetary policy?
To control the money supply and interest rates
ExplanationMonetary policy aims to regulate money circulation and interest rates for economic stability.
#13
What does the 'Pareto Efficiency' concept entail?
A state where no individual can be made better off without making someone else worse off
ExplanationPareto Efficiency suggests an optimal state where no one can gain without causing harm to others.
#14
What is meant by 'comparative advantage' in international trade?
When a country can produce a good at a lower opportunity cost than another country
ExplanationComparative advantage highlights a nation's ability to produce a good more efficiently than others.
#15
What is the 'labor force participation rate'?
The percentage of the working-age population that is either employed or actively looking for work
ExplanationIt indicates the proportion of the working-age population engaged in or seeking employment.