#1
What is inflation?
An increase in the general price level of goods and services
ExplanationRise in overall prices of goods and services.
#2
What is Gross Domestic Product (GDP) used to measure?
The total value of goods and services produced within a country's borders
ExplanationTotal economic output within a nation's boundaries.
#3
What is 'opportunity cost'?
The cost of forgoing the next best alternative when making a decision
ExplanationCost of choosing one alternative over another.
#4
What does 'elasticity of demand' measure?
The responsiveness of quantity demanded to changes in price
ExplanationDemand's sensitivity to price alterations.
#5
What is the 'Laffer Curve' often used to illustrate?
The relationship between tax rates and tax revenue
ExplanationTax rate's effect on tax revenue.
#6
What is the 'Phillips Curve' used to describe?
The relationship between inflation and unemployment
ExplanationCorrelation between inflation and unemployment rates.
#7
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.
ExplanationGovernment's vs. central bank's economic tools.
#8
What is the 'Multiplier Effect' in economics?
The amplification of initial changes in spending or investment through the economy
ExplanationAmplification of spending or investment changes.
#9
What is 'stagflation'?
A period of high inflation and low economic growth
ExplanationHigh inflation and low growth simultaneously.
#10
What is the 'liquidity trap' in macroeconomics?
A situation where interest rates are so low that monetary policy becomes ineffective
ExplanationLow interest rates render monetary policy futile.
#11
What is the 'supply-side economics' theory?
A theory that emphasizes the importance of supply in driving economic growth
ExplanationFocuses on supply's role in economic growth.
#12
What is 'creative destruction' according to economist Joseph Schumpeter?
The process by which new innovations destroy traditional industries
ExplanationInnovation-induced industry disruption.