#1
What is the law of demand in economics?
As the price of a good increases, the quantity demanded decreases.
ExplanationHigher prices reduce consumer demand.
#2
What does GDP stand for?
Gross Domestic Product
ExplanationTotal value of goods and services produced in a country.
#3
What is a budget deficit?
When government spending exceeds government revenue in a given period
ExplanationSpending surpasses income in government budgets.
#4
What is the difference between microeconomics and macroeconomics?
Microeconomics focuses on individual markets and industries, while macroeconomics studies the economy as a whole
ExplanationMicro analyzes parts, macro studies the whole economy.
#5
What does the term 'opportunity cost' refer to in economics?
The value of the next best alternative foregone when a choice is made
ExplanationCost of the best alternative not chosen.
#6
What is the law of supply in economics?
As the price of a good increases, the quantity supplied increases.
ExplanationProducers supply more at higher prices.
#7
Which of the following is NOT a characteristic of a perfectly competitive market?
Barriers to entry
ExplanationPerfect competition implies easy market entry.
#8
What is the 'invisible hand' in economics?
The idea that self-interest and competition can lead to economic prosperity
ExplanationMarket forces guide economic behavior.
#9
What is the Phillips Curve?
A curve showing the relationship between inflation and unemployment
ExplanationIllustrates trade-off between inflation and unemployment.
#10
What is the Tragedy of the Commons?
A situation where individuals overuse or deplete a shared resource
ExplanationOverexploitation of communal resources.
#11
What does the term 'elasticity' measure in economics?
The responsiveness of quantity demanded to changes in price
ExplanationHow demand reacts to price fluctuations.
#12
What is the concept of comparative advantage in international trade?
The ability of a country to produce a good at a lower opportunity cost than another country
ExplanationCountries specialize in goods with lower costs.
#13
What is the primary function of central banks in most economies?
Conducting monetary policy
ExplanationControl money supply and interest rates.
#14
What is the formula to calculate Price Elasticity of Demand?
Percentage change in quantity demanded divided by percentage change in price
ExplanationMeasures responsiveness of demand to price changes.
#15
What is the quantity theory of money in economics?
The theory that changes in the money supply only affect nominal variables, such as prices
ExplanationMoney supply changes affect prices.
#16
What is the Cobb-Douglas production function used to represent?
The relationship between input and output in a production process with two or more inputs
ExplanationShows how inputs produce outputs.
#17
What is the Ricardian Equivalence theorem in economics?
The proposition that government borrowing has no effect on aggregate demand because individuals anticipate future tax increases to pay off the debt
ExplanationBorrowing equals future tax expectations.