#1
In the context of economics, what does 'perfect competition' imply?
Many buyers and many sellers with similar products
ExplanationMany buyers and sellers with similar products.
#2
What is the law of demand in economics?
As the price of a good decreases, the quantity demanded increases
ExplanationPrice decrease leads to increased demand.
#3
What is the primary function of central banks in an economy?
Regulating interest rates
ExplanationCentral banks regulate interest rates.
#4
What is the law of diminishing marginal utility?
As a consumer consumes more of a good, the additional satisfaction (utility) from each additional unit decreases
ExplanationDecreasing satisfaction from consuming additional units of a good.
#5
What does 'FOMC' stand for in the context of the U.S. Federal Reserve?
Federal Open Market Committee
ExplanationFOMC stands for Federal Open Market Committee.
#6
Which of the following best defines the term 'market efficiency' in economics?
The ability of markets to accurately reflect all available information
ExplanationMarkets reflect all available information accurately.
#7
Which of the following is a characteristic of an 'inefficient market'?
Stock prices are consistently overvalued
ExplanationStock prices are consistently overestimated.
#8
What does 'CPI' stand for?
Consumer Price Index
ExplanationCPI stands for Consumer Price Index.
#9
What is the formula for calculating GDP using the expenditure approach?
GDP = C + I + G + NX
ExplanationGDP calculation: Consumption + Investment + Government Spending + Net Exports.
#10
Which of the following is a characteristic of a command economy?
The government owns most property resources and economic decision-making occurs through a central economic plan
ExplanationGovernment control over resources and economic decisions.
#11
Which theory suggests that stock prices reflect all information and consistently trade at their fair value?
Efficient Market Hypothesis (EMH)
ExplanationStock prices reflect all information and trade fairly.
#12
What does the 'random walk theory' propose in the context of financial markets?
Stock prices reflect new information in an unpredictable manner
ExplanationStock prices change unpredictably with new information.
#13
What is the difference between nominal GDP and real GDP?
Nominal GDP measures the total value of final goods and services produced in a country during a given period, while real GDP measures the value of goods and services adjusted for changes in price levels
ExplanationNominal GDP is unadjusted for price changes, while real GDP is adjusted.
#14
What is the Phillips curve used to describe?
The relationship between inflation and unemployment
ExplanationRelationship between inflation and unemployment.
#15
What does the term 'opportunity cost' refer to in economics?
The value of the next best alternative forgone when a decision is made
ExplanationCost of the next best alternative foregone.