#1
1. What is the fundamental economic problem?
Scarcity
ExplanationLimited resources vs unlimited wants.
#2
10. In monetary policy, what does 'open market operations' involve?
The buying and selling of government securities by the central bank
ExplanationCentral bank adjusts money supply by buying/selling securities.
#3
15. What is the role of the Federal Reserve in the United States?
Controlling the money supply and implementing monetary policy
ExplanationOversees monetary policy and banking system stability.
#4
19. According to the law of diminishing marginal utility, what happens as a person consumes more units of a good or service?
Total utility increases at a decreasing rate
ExplanationEach additional unit adds less satisfaction.
#5
20. What is the role of the World Trade Organization (WTO) in the global economy?
To promote fair competition and reduce trade barriers among member countries
ExplanationEnsures fair trade practices and dispute resolution.
#6
25. What is the role of the International Monetary Fund (IMF) in the global financial system?
To provide financial assistance to countries facing balance of payments problems
ExplanationStabilize global monetary system and aid countries in crisis.
#7
2. Which economic system relies on private ownership and individual incentives?
Capitalism
ExplanationPrivate ownership drives production and distribution.
#8
3. What is the formula for calculating GDP (Gross Domestic Product)?
GDP = Consumption + Investment + Government Spending + Net Exports
ExplanationSum of all goods and services produced within a country.
#9
6. In economics, what does the term 'elasticity' refer to?
The measure of responsiveness of quantity demanded to a change in price
ExplanationHow demand changes with price fluctuations.
#10
7. What is the Tragedy of the Commons in economic theory?
The overuse and depletion of shared resources due to individual self-interest
ExplanationIndividuals exploit resources for personal gain, depleting them.
#11
12. What is the concept of the 'invisible hand' in economic theory?
The self-regulating nature of free markets guided by individual self-interest
ExplanationMarkets adjust naturally without central intervention.
#12
13. Which type of inflation occurs when there is an increase in the overall price level due to an increase in production costs?
Cost-push inflation
ExplanationPrice increases driven by production cost hikes.
#13
17. Which economic theory argues that government intervention is necessary to address market failures and ensure social welfare?
Keynesian economics
ExplanationAdvocates for government intervention during economic downturns.
#14
4. What is the concept of opportunity cost?
The value of the next best alternative forgone
ExplanationCost of choosing one option over another.
#15
5. According to the Phillips Curve, what is the relationship between inflation and unemployment?
Inverse relationship
ExplanationAs one decreases, the other tends to increase.
#16
8. Which economic indicator is considered a lagging indicator?
Unemployment rate
ExplanationReflects economic performance after trends have occurred.
#17
9. What is the Coase Theorem in economics?
The proposition that private parties can efficiently resolve disputes without government intervention
ExplanationMarket participants can solve externalities.
#18
11. What is the Laffer Curve used to illustrate in economics?
The relationship between tax rates and government revenue
ExplanationTax rate's impact on government revenue and economic activity.
#19
14. What is the concept of a 'veil of ignorance' in the context of distributive justice?
The notion that individuals should decide on justice without knowing their own position in society
ExplanationFair decision-making by ignoring personal circumstances.
#20
16. What does the term 'moral hazard' refer to in the context of economics and finance?
The tendency for individuals to take on more risk when they are protected from the consequences of their actions
ExplanationIncreased risk-taking due to protection from losses.