#1
What is the law of demand?
As prices increase, demand decreases.
ExplanationHigher prices lead to reduced consumer demand.
#2
What is the opportunity cost?
The value of the best alternative forgone when a decision is made
ExplanationOpportunity cost is the value of the next best alternative foregone.
#3
Which of the following is NOT a factor of production?
Machinery
ExplanationMachinery is a product of production, not a factor of production.
#4
What is the law of diminishing returns?
As input increases, output increases at a decreasing rate.
ExplanationAdding more input leads to diminishing additional output.
#5
What is a monopoly?
A market structure with only one seller and many buyers.
ExplanationMonopoly is a market with a single seller and limited competition.
#6
Which of the following is NOT a characteristic of perfect competition?
Control over price by individual firms
ExplanationPerfect competition lacks individual firm control over prices.
#7
What is the formula to calculate GDP?
Consumption + Investment + Government Spending + Exports - Imports
ExplanationGDP is the sum of consumption, investment, government spending, and net exports.
#8
What is fiscal policy?
Government policy related to taxation and spending
ExplanationFiscal policy involves government decisions on taxation and spending.
#9
What does the term 'elasticity of demand' measure?
The responsiveness of quantity demanded to changes in price
ExplanationElasticity of demand gauges how demand changes with price variations.
#10
What is the Phillips curve?
A curve showing the relationship between inflation and unemployment.
ExplanationPhillips curve illustrates the trade-off between inflation and unemployment.
#11
What does the term 'invisible hand' refer to in economics?
The self-regulating nature of markets
ExplanationMarkets naturally self-regulate through individual pursuit of self-interest.
#12
What is the Tragedy of the Commons?
A situation where private ownership leads to overuse and depletion of a shared resource
ExplanationShared resources are overused and depleted due to private ownership.
#13
Which of the following is NOT a macroeconomic goal?
Profit maximization
ExplanationMacroeconomic goals focus on broader economic measures, not individual profits.
#14
What is the Laffer curve?
A curve showing the relationship between tax rates and tax revenue.
ExplanationLaffer curve depicts the relationship between tax rates and government tax revenue.
#15
What is the difference between monetary policy and fiscal policy?
Monetary policy involves controlling the money supply and interest rates, while fiscal policy involves government spending and taxation.
ExplanationMonetary policy manages money supply and interest rates, while fiscal policy governs government spending and taxation.