#1
Which of the following is a leading economic indicator?
Stock Market Index
ExplanationForecasts future economic activity.
#2
Which of the following is a lagging economic indicator?
Unemployment Rate
ExplanationReflects past economic performance.
#3
What does the term 'opportunity cost' mean in economics?
The value of the best alternative forgone when a decision is made
ExplanationRepresents the benefits sacrificed by choosing one alternative over another.
#4
Which economic concept is represented by the term 'stagflation'?
Simultaneous high inflation and high unemployment
ExplanationOccurs when an economy experiences both high inflation and high unemployment simultaneously.
#5
What is the economic concept known as the 'Liquidity Trap'?
A situation where interest rates are low, but people hoard money instead of spending or investing.
ExplanationOccurs when monetary policy becomes ineffective due to a preference for holding onto cash rather than spending or investing.
#6
What is the formula for calculating GDP (Gross Domestic Product)?
Consumption + Investment + Government Spending + (Exports - Imports)
ExplanationMeasures the total value of goods and services produced within a country's borders.
#7
Which economic metric is used to measure the overall health of the labor market?
Participation Rate
ExplanationIndicates the percentage of working-age individuals who are employed or actively seeking employment.
#8
What is the primary goal of monetary policy?
Stabilizing prices and controlling inflation
ExplanationAims to maintain price stability and moderate inflation.
#9
In the context of economics, what does the term 'elasticity' refer to?
The responsiveness of quantity demanded to a change in price
ExplanationMeasures the sensitivity of demand or supply to changes in price.
#10
Which economic system is characterized by private ownership of the means of production and free market competition?
Market economy
ExplanationOperates based on supply and demand with limited government intervention.
#11
What is the significance of the Laffer Curve in economic theory?
It demonstrates the relationship between tax rates and government revenue.
ExplanationIllustrates the trade-off between tax rates and tax revenue.
#12
What is the difference between fiscal policy and monetary policy?
Fiscal policy involves government spending and taxation, while monetary policy involves the supply of money and interest rates.
ExplanationFiscal policy focuses on government revenue and spending, while monetary policy regulates the money supply and interest rates to influence economic activity.
#13
What is the Phillips Curve used to illustrate in economics?
The relationship between inflation and unemployment.
ExplanationShows the inverse relationship between inflation and unemployment.
#14
What is the purpose of the Consumer Price Index (CPI) in economic analysis?
To measure changes in the overall cost of living
ExplanationTracks changes in the price level of a basket of consumer goods and services.
#15
In macroeconomics, what is the difference between nominal GDP and real GDP?
Nominal GDP includes inflation, while real GDP is adjusted for inflation.
ExplanationNominal GDP is measured at current prices, whereas real GDP adjusts for inflation to reflect true economic growth.
#16
In international trade, what does a trade surplus indicate for a country?
The country exports more than it imports.
ExplanationEarns more from exports than it spends on imports.
#17
What is the role of the Federal Reserve in the United States?
Controlling inflation through interest rates and monetary policy
ExplanationCentral banking authority responsible for monetary policy and regulating the financial system.