#1
Which of the following is an example of a fiscal intervention?
Government increasing taxes
ExplanationFiscal intervention involves government actions on taxation and spending.
#2
What is the primary aim of monetary interventions?
To control inflation and unemployment
ExplanationMonetary interventions regulate money supply and interest rates to stabilize the economy.
#3
Which economic concept refers to the total value of goods and services produced within a country's borders in a specific time period?
Gross Domestic Product (GDP)
ExplanationGDP measures the total economic output of a country within its borders.
#4
Which economic theory suggests that government intervention should be minimal and markets should operate freely?
Laissez-faire capitalism
ExplanationLaissez-faire advocates for minimal government interference in market activities.
#5
What is the term used to describe a situation where there is a sustained decrease in the general price level of goods and services?
Deflation
ExplanationDeflation refers to a persistent decline in overall prices.
#6
Which economic concept refers to the increase in the general price level of goods and services over a period of time?
Inflation
ExplanationInflation represents the rise in the overall price level of goods and services.
#7
Which economic theory emphasizes the importance of government intervention to correct market failures?
Keynesian economics
ExplanationKeynesian economics advocates for government intervention to address economic fluctuations.
#8
What is the 'crowding out' effect in economics?
Increase in government spending leading to higher interest rates and reduced private investment
ExplanationIncreased government spending can crowd out private investment by raising interest rates.
#9
What is the primary goal of trade tariffs as an economic intervention?
To protect domestic industries
ExplanationTrade tariffs aim to shield domestic industries from foreign competition.
#10
Which of the following is an example of a supply-side economic intervention?
Cutting corporate tax rates
ExplanationSupply-side interventions focus on improving production incentives, like tax cuts.
#11
What is the primary objective of antitrust laws in economics?
To prevent monopolies and promote competition
ExplanationAntitrust laws aim to maintain fair competition and prevent market dominance.
#12
Which of the following is NOT a tool of monetary policy?
Fiscal stimulus
ExplanationFiscal stimulus is a government's spending or tax measures, not a monetary tool.
#13
Which policy tool is often used during times of economic recession to stimulate demand?
Quantitative easing
ExplanationQuantitative easing involves central bank purchases of financial assets to boost liquidity.
#14
In economics, what is the 'tragedy of the commons'?
A situation where individuals pursue their self-interest, leading to the depletion of shared resources
ExplanationIt describes the overuse of common resources due to individual self-interest.