#1
Which of the following is NOT a characteristic of a perfectly competitive market?
Barriers to entry
ExplanationPerfect competition implies no barriers to entry.
#2
What does GDP stand for?
Gross Domestic Product
ExplanationGDP measures the total value of goods and services produced within a country.
#3
What is the primary goal of monetary policy?
Minimizing inflation
ExplanationMaintaining stable prices and controlling inflation.
#4
Which of the following is a tool of fiscal policy?
Taxation
ExplanationUsed to influence aggregate demand.
#5
What is the opportunity cost of a decision?
The cost of the next best alternative forgone
ExplanationThe value of the next best alternative.
#6
Which of the following is a characteristic of a command economy?
Centralized government planning
ExplanationGovernment dictates production and distribution.
#7
What is the 'Laffer Curve' used to illustrate?
The relationship between tax rates and tax revenue
ExplanationIt demonstrates the point at which tax revenue is maximized.
#8
Which monetary policy tool involves the buying and selling of government securities?
Open market operations
ExplanationIt affects the money supply and interest rates.
#9
What does the Phillips Curve describe?
The relationship between unemployment and inflation
ExplanationTrade-off between unemployment and inflation rates.
#10
Which of the following is a characteristic of monopolistic competition?
Product differentiation
ExplanationFirms differentiate products to gain market power.
#11
What does the term 'ceteris paribus' mean in economics?
All else being equal
ExplanationAssumes all other variables remain constant.
#12
Which of the following is a function of central banks?
Setting interest rates
ExplanationRegulating money supply and interest rates.
#13
According to the law of demand, what happens when the price of a good increases?
Quantity demanded decreases
ExplanationInverse relationship between price and quantity demanded.
#14
What is the 'tragedy of the commons'?
The depletion of shared resources due to individual self-interest
ExplanationOccurs when individuals exploit common resources.
#15
What is the 'liquidity trap' in macroeconomics?
A situation where monetary policy is ineffective
ExplanationOccurs when interest rates are very low.
#16
What is the 'natural rate of unemployment'?
The unemployment rate at which the economy is at full employment
ExplanationFrictional and structural unemployment.
#17
According to the law of diminishing returns, what happens when one input is increased while other inputs are held constant?
Total output increases at a decreasing rate.
ExplanationMarginal product of an input decreases as more is added.