Economic Phenomena and Dynamics Quiz

Test your knowledge with these 12 questions on inflation, GDP, fiscal & monetary policy, competition, and more.

Practice Learn Test

What is inflation?

A decrease in the general price level of goods and services

An increase in the general price level of goods and services

A stable price level of goods and services

A decrease in the quantity of money in circulation

What is Gross Domestic Product (GDP) used to measure?

The total value of goods and services produced within a country's borders

The total value of imports and exports of a country

The total value of assets owned by a country

The total value of government expenditures

What is 'opportunity cost'?

The cost of producing one more unit of a good or service

The cost of forgoing the next best alternative when making a decision

The total cost of production including fixed and variable costs

The cost of purchasing resources for production

What does 'elasticity of demand' measure?

The responsiveness of quantity demanded to changes in price

The responsiveness of price to changes in quantity demanded

The responsiveness of quantity supplied to changes in price

The responsiveness of price to changes in quantity supplied

What is the 'Laffer Curve' often used to illustrate?

The relationship between tax rates and tax revenue

The relationship between unemployment and inflation

The relationship between interest rates and investment

The relationship between government spending and economic growth

What is the 'Phillips Curve' used to describe?

The relationship between inflation and unemployment

The relationship between interest rates and investment

The relationship between fiscal policy and monetary policy

The relationship between exchange rates and trade balance

What is the difference between fiscal policy and monetary policy?

Fiscal policy involves government spending and taxation, while monetary policy involves central bank actions related to money supply and interest rates.

Fiscal policy involves changes in interest rates, while monetary policy involves government spending and taxation.

Fiscal policy involves changes in money supply, while monetary policy involves government spending and taxation.

Fiscal policy involves international trade, while monetary policy involves domestic economic activities.

What is the 'Multiplier Effect' in economics?

The effect of a change in one economic variable on another variable

The effect of a change in government spending on overall economic activity

The amplification of initial changes in spending or investment through the economy

The effect of a change in interest rates on consumer spending

What is 'stagflation'?

A period of low inflation and low economic growth

A period of high inflation and high economic growth

A period of high inflation and low economic growth

A period of low inflation and high economic growth

#10

What is the 'liquidity trap' in macroeconomics?

A situation where the central bank loses control over the money supply

A situation where interest rates are so low that monetary policy becomes ineffective

A situation where inflation is high and economic growth is stagnant

A situation where fiscal policy leads to a budget deficit

#11

What is the 'supply-side economics' theory?

A theory that emphasizes the importance of demand in driving economic growth

A theory that emphasizes the importance of supply in driving economic growth

A theory that emphasizes the importance of monetary policy in driving economic growth

A theory that emphasizes the importance of fiscal policy in driving economic growth

#12

What is 'creative destruction' according to economist Joseph Schumpeter?

The process by which new innovations destroy traditional industries

The process by which traditional industries are protected from new innovations

The process by which government regulations stifle innovation

The process by which consumer preferences remain constant over time