Basic Economic Principles and Market Dynamics Quiz

Law of demand asserts an inverse relationship between price and quantity demanded.

Opportunity cost represents the value sacrificed when opting for one choice over another.

The law of supply posits a direct relationship between price and quantity supplied.

The Federal Reserve manages monetary policy to promote economic stability and growth.

The WTO promotes global trade by facilitating negotiations and resolving trade-related disputes.

Microeconomics focuses on studying the decisions and interactions of individual consumers and producers.

Perfectly competitive markets feature numerous buyers and sellers with no individual market power.

GDP is the sum of consumption, investment, government spending, and net exports.

Money does not directly impact the standard of living; it serves as a medium of exchange, unit of account, and store of value.

Monopoly features a sole seller dictating prices due to the absence of competition.

Perfect competition is marked by ease of entry and exit, lacking significant barriers.

Central banks regulate money supply and interest rates to achieve economic goals through monetary policy.

Monopolistic competition involves firms differentiating products to gain a competitive edge.

Elasticity of demand gauges how quantity demanded reacts to changes in price.

Real GDP accounts for inflation, providing a more accurate economic measure than nominal GDP.

Phillips curve suggests an inverse correlation between inflation and unemployment rates.

Comparative advantage advocates specializing in goods with the lowest opportunity cost for efficient international trade.

Quantity theory posits a direct impact of the money supply on the overall price level.