#1
In the circular flow diagram, households are primarily responsible for:
Consuming goods and services
ExplanationHouseholds consume goods and services in the circular flow diagram.
#2
Which of the following is a factor of production?
Labor
ExplanationLabor is a factor of production.
#3
Which of the following best describes the term 'opportunity cost'?
The cost of an alternative that must be forgone in order to pursue a certain action
ExplanationOpportunity cost is the cost of the alternative forgone when choosing a certain action.
#4
In the circular flow model, which sector is responsible for providing goods and services to businesses?
Households
ExplanationHouseholds provide goods and services to businesses in the circular flow model.
#5
Which of the following is NOT a function of money in an economy?
Producer of goods
ExplanationMoney is not a producer of goods in an economy.
#6
The term 'inflation' refers to:
A general increase in prices and fall in the purchasing value of money
ExplanationInflation refers to a general increase in prices and a decrease in the purchasing value of money.
#7
Gross Domestic Product (GDP) is the total value of:
Goods and services produced within a country in a year
ExplanationGDP measures the total value of goods and services produced within a country in a year.
#8
Which economic model assumes that individuals act rationally to maximize their own self-interest?
Neoclassical Economics
ExplanationNeoclassical Economics assumes individuals act rationally to maximize self-interest.
#9
Which of the following is NOT a component of Aggregate Demand (AD) in macroeconomics?
Imports
ExplanationImports are not a component of Aggregate Demand (AD).
#10
In the circular flow model, firms provide households with income in the form of:
Wages
ExplanationFirms provide households with income in the form of wages.
#11
Which of the following is an example of a fiscal policy tool used to stimulate economic growth?
Increasing government spending
ExplanationIncreasing government spending is a fiscal policy tool for stimulating economic growth.
#12
The Phillips curve illustrates the relationship between:
Inflation and unemployment
ExplanationThe Phillips curve illustrates the relationship between inflation and unemployment.
#13
The circular flow diagram represents the flow of goods, services, and money between:
Households and businesses
ExplanationThe circular flow diagram shows the flow of goods, services, and money between households and businesses.
#14
Which of the following is a characteristic of a mixed economy?
Private ownership of resources
ExplanationMixed economies feature private ownership of resources.
#15
The production possibilities frontier (PPF) shows the maximum combinations of two goods that can be produced given:
Full employment of resources
ExplanationPPF shows the maximum combinations of goods produced given full employment of resources.
#16
Which economic concept suggests that as production of a good increases, the opportunity cost of producing an additional unit also increases?
Law of Increasing Opportunity Cost
ExplanationThe Law of Increasing Opportunity Cost states that as production increases, opportunity cost rises.
#17
Which of the following is NOT a characteristic of perfect competition?
Differentiated products
ExplanationPerfect competition does not involve differentiated products.
#18
The Lorenz curve is used to illustrate:
Income distribution
ExplanationThe Lorenz curve illustrates income distribution.