Economic Challenges and Government Responses Quiz

Democracy is a political system, not an economic system.

Fiscal policy aims to stabilize the economy through government spending and taxation.

GDP measures the total economic output of a country in a specific timeframe.

A recession is a sustained economic decline with two consecutive quarters of negative GDP growth.

In a market economy, property is privately owned and allocated based on market forces.

A budget deficit occurs when government spending surpasses its revenue.

Inflation refers to a continuous rise in the overall price level in an economy.

The Gini coefficient gauges the extent of income inequality within a population.

Opportunity cost is the value of the best alternative foregone when a choice is made.

A command economy is characterized by central planning and government control over economic activities.

Sales tax is regressive as it takes a higher percentage of income from lower-income individuals.

Supply-side economics aims to boost economic growth by focusing on increasing production.

A budget deficit occurs when government spending surpasses its revenues in a fiscal year.

CPI measures the average price level of goods and services consumed by households.

Trade deficit is the negative balance resulting from a country's exports being less than its imports.

Fiscal policy utilizes taxation as a tool to regulate economic activity.

M2 money supply represents the total amount of money in circulation in an economy.

Contractionary fiscal policy is implemented to reduce inflation by decreasing government spending or increasing taxes.

Traditional economies often rely on barter systems for the exchange of goods and services.

Interest rates are a key tool used in monetary policy to regulate the money supply.

Stagflation is a condition of high inflation combined with high unemployment.