#1
Which economic system relies on supply and demand with minimal government intervention?
Capitalism
ExplanationCapitalism is an economic system characterized by private ownership of the means of production and market-driven allocation of resources.
#2
Which international organization provides financial assistance and policy advice to member countries with economic difficulties?
International Monetary Fund (IMF)
ExplanationThe IMF offers financial aid and economic advice to member nations facing financial challenges and instability.
#3
Which economic indicator is often used to assess the overall health of an economy and is calculated as the sum of consumer spending, business investment, government spending, and net exports?
Gross Domestic Product (GDP)
ExplanationGDP measures the total economic output of a country, including consumer spending, business investment, government spending, and net exports.
#4
Which economic policy tool involves adjusting the money supply and interest rates to achieve macroeconomic goals?
Monetary policy
ExplanationMonetary policy involves the control of money supply and interest rates to achieve macroeconomic objectives such as price stability and economic growth.
#5
Which economic theory suggests that government intervention in the economy is necessary to address market failures and ensure social welfare?
Keynesian economics
ExplanationKeynesian economics advocates for government intervention to manage economic downturns, stabilize markets, and promote social welfare.
#6
What is fiscal policy primarily concerned with?
Managing government expenditures and taxation
ExplanationFiscal policy focuses on government spending, taxation, and borrowing to influence the economy.
#7
In economics, what does the term 'Laissez-faire' refer to?
Free-market capitalism with little to no government interference
ExplanationLaissez-faire advocates minimal government intervention in the economy, promoting free-market capitalism.
#8
What is the Phillips Curve used to illustrate in economic policy?
The relationship between inflation and unemployment
ExplanationThe Phillips Curve depicts the inverse relationship between inflation and unemployment in an economy.
#9
What is the primary goal of expansionary fiscal policy during a recession?
To boost economic growth and employment
ExplanationExpansionary fiscal policy aims to stimulate the economy during a recession by increasing government spending and cutting taxes.
#10
Which economic concept suggests that individuals and businesses will act in a way that maximizes their own self-interest?
Rational choice theory
ExplanationRational choice theory posits that individuals and businesses make decisions that maximize their own self-interest.
#11
Which of the following is an example of a contractionary monetary policy tool?
Selling government securities
ExplanationContractionary monetary policy aims to reduce money supply and control inflation, often done by selling government securities.
#12
What is the Tragedy of the Commons in the context of economic policy?
The depletion of shared resources due to individual self-interest
ExplanationThe Tragedy of the Commons refers to the overuse or depletion of common resources when individuals prioritize personal gain.
#13
Which of the following is a tool of trade policy aimed at protecting domestic industries from foreign competition?
Tariffs
ExplanationTariffs are trade policy tools that impose taxes on imported goods, protecting domestic industries from foreign competition.
#14
In the context of economic policy, what does the term 'stagflation' refer to?
High inflation combined with high unemployment
ExplanationStagflation is a situation of simultaneous high inflation and high unemployment, posing challenges for economic policymakers.
#15
What is the purpose of quantitative easing in monetary policy?
To stimulate economic growth by increasing the money supply
ExplanationQuantitative easing involves central banks injecting money into the economy to spur growth by increasing the money supply.