#1
What does GDP stand for in economics?
Gross Domestic Product
ExplanationTotal value of goods and services produced within a country's borders.
#2
Which of the following is NOT a factor of production?
Profit
ExplanationProfit is an outcome, not a factor like land, labor, and capital.
#3
What is the purpose of fiscal policy?
To regulate government spending and taxation
ExplanationControlling government revenue and expenditure to influence economic conditions.
#4
What is the law of supply?
As the price increases, the quantity supplied increases
ExplanationDirect relationship between price and quantity supplied.
#5
Which of the following is a characteristic of a perfectly competitive market?
Homogeneous products
ExplanationProducts are identical, leading to price-taking behavior.
#6
What is the law of demand?
As the price decreases, the quantity demanded increases
ExplanationInverse relationship between price and quantity demanded.
#7
In economics, what is the term 'inflation' referring to?
An increase in the general price level of goods and services
ExplanationReduction in purchasing power due to rising prices.
#8
What is the role of the Federal Reserve in the United States?
Conducting monetary policy
ExplanationRegulating money supply and interest rates to achieve economic goals.
#9
Which of the following is an example of a regressive tax?
Sales tax
ExplanationTax takes a higher percentage of income from low-income earners.
#10
What does the term 'opportunity cost' refer to in economics?
The cost of the next best alternative forgone
ExplanationValue of the best alternative foregone when a choice is made.
#11
What is the formula for calculating price elasticity of demand?
Percentage change in quantity demanded divided by percentage change in price
ExplanationMeasure of responsiveness of quantity demanded to price changes.
#12
What is the difference between nominal GDP and real GDP?
Real GDP is adjusted for inflation, while nominal GDP is not
ExplanationReal GDP accounts for changes in price levels, whereas nominal GDP does not.
#13
What is the difference between monetary policy and fiscal policy?
Monetary policy involves changes in the money supply, while fiscal policy involves government spending and taxation
ExplanationMonetary policy controls money supply and interest rates; fiscal policy regulates government spending and taxes.
#14
What is the concept of comparative advantage in international trade?
Countries should produce goods for which they have the lowest opportunity cost
ExplanationEfficiency gained by specializing in the production of goods with the lowest opportunity cost.