#1
In a market economy, what determines the prices of goods and services?
Consumers and producers in the market
ExplanationPrices are determined by the interaction of supply and demand among consumers and producers.
#2
In the context of international trade, what does the term 'trade surplus' mean?
Exporting more goods than importing
ExplanationA trade surplus occurs when a country exports more goods and services than it imports.
#3
Which economic system allows for private ownership of businesses and individuals to make decisions based on self-interest?
Capitalism
ExplanationCapitalism permits private ownership of businesses and emphasizes individual decision-making for self-interest.
#4
What is the term for a situation where the government spends more money than it collects in revenue, resulting in a budgetary shortfall?
Budget deficit
ExplanationA budget deficit occurs when government expenditures exceed revenue, leading to a financial shortfall.
#5
Which economic system relies on customs, traditions, and rituals to determine what goods and services will be produced, how they will be produced, and for whom?
Traditional economy
ExplanationA traditional economy relies on cultural practices to guide economic decisions about production and distribution.
#6
Which economic concept refers to the total value of all goods and services produced in a country within a specific time period?
Gross Domestic Product (GDP)
ExplanationGDP measures the overall economic output of a country.
#7
What is the term for the total value of a person's assets, including money and property, minus liabilities?
Net worth
ExplanationNet worth represents an individual's wealth after subtracting debts and liabilities.
#8
What is the term for a sustained increase in the general price level of goods and services in an economy?
Inflation
ExplanationInflation reflects a continual rise in the overall price level of goods and services.
#9
Which economic indicator is often used to assess the overall health of an economy and is calculated as the percentage change in the Consumer Price Index (CPI)?
Inflation rate
ExplanationThe inflation rate measures the percentage change in the CPI, providing insights into economic health.
#10
What is the term for a situation in which the quantity of goods and services demanded exceeds the quantity supplied, leading to an increase in prices?
Shortage
ExplanationA shortage occurs when demand surpasses the available supply, resulting in higher prices.
#11
Which economic concept measures the percentage increase in the price level of a basket of goods and services over time?
Consumer Price Index (CPI)
ExplanationThe CPI measures the average change in prices of a basket of goods and services over a specified period.
#12
In the context of international trade, what does the term 'protectionism' refer to?
Implementing trade barriers to protect domestic industries
ExplanationProtectionism involves the use of trade barriers to safeguard domestic industries from foreign competition.
#13
What economic system is characterized by government ownership and control of the means of production?
Command economy
ExplanationIn a command economy, the government makes decisions about what and how to produce.
#14
Which economic concept measures the responsiveness of the quantity demanded of a good to a change in its price?
Elasticity
ExplanationElasticity quantifies how demand for a product changes with variations in price.
#15
In economic terms, what does the law of diminishing marginal returns state?
As production increases, total output decreases
ExplanationThe law states that adding more of one factor of production while holding others constant will lead to a decrease in the marginal output.
#16
What economic theory suggests that government intervention in the economy is necessary to address issues such as income inequality and market failures?
Keynesian economics
ExplanationKeynesian economics advocates for government intervention to stabilize the economy and address market imperfections.
#17
What is the term for a market structure characterized by a large number of sellers offering similar but differentiated products?
Monopolistic competition
ExplanationMonopolistic competition features many sellers offering products with slight differences, allowing for product differentiation.
#18
In economics, what does the term 'opportunity cost' refer to?
The cost of forgoing the next best alternative
ExplanationOpportunity cost is the value of the next best alternative foregone when a decision is made.
#19
In the context of international trade, what does the term 'dumping' refer to?
Selling goods in the domestic market below production cost
ExplanationDumping involves selling goods in the domestic market at prices below the cost of production.