#1
Which of the following is a fundamental economic concept referring to the situation where resources are limited?
Scarcity
ExplanationResources are insufficient to satisfy all human wants and needs.
#2
Which economic principle suggests that as the price of a good increases, the quantity demanded by consumers decreases, and vice versa, assuming all other factors remain constant?
The law of demand
ExplanationPrice and quantity demanded have an inverse relationship when other factors are constant.
#3
In macroeconomics, what does GDP stand for?
Gross Domestic Product
ExplanationTotal monetary value of all finished goods and services produced within a country's borders in a specific period.
#4
What is the term used to describe the total value of all goods and services produced within a country's borders in a specific time period?
Gross Domestic Product (GDP)
ExplanationIndicator of a nation's economic health and standard of living.
#5
What does the term 'inflation' refer to in economics?
A sustained increase in the general price level of goods and services
ExplanationGeneral rise in prices eroding purchasing power over time.
#6
Which of the following is NOT a component of aggregate demand (AD) in macroeconomics?
Imports
ExplanationAggregate demand represents total spending in the economy, including consumption, investment, government spending, but not imports.
#7
What is the term for a situation where there is a sustained increase in the general price level of goods and services over time?
Inflation
ExplanationErodes purchasing power and reduces the value of money over time.
#8
What is the primary role of government intervention in a market economy?
To provide public goods and correct market failures
ExplanationTo ensure the provision of goods/services that private markets fail to produce efficiently.
#9
Which economic policy aims to stimulate economic growth by increasing the money supply and reducing interest rates?
Monetary policy
ExplanationControlled by central banks, it influences borrowing, spending, and investment.
#10
According to the concept of opportunity cost, what is the cost of an action?
The value of the next best alternative foregone
ExplanationThe value of what must be given up to undertake an alternative.
#11
Which of the following is a characteristic of a perfectly competitive market?
Few sellers and many buyers
ExplanationMany buyers and sellers with no single entity influencing market price.
#12
What is the economic term for the total revenue minus the explicit (monetary) cost of producing goods or services?
Profit
ExplanationThe financial gain from a business venture.
#13
Which of the following is NOT considered a factor of production?
Money
ExplanationAlthough important, money serves as a medium of exchange rather than a factor of production.
#14
In economics, what is the term for a situation where one party in a transaction has more information than the other party, leading to an imbalance in power?
Asymmetric information
ExplanationUnequal access to information in transactions can lead to inefficiencies.
#15
What does the 'Laffer Curve' illustrate in economics?
The relationship between tax rates and tax revenue
ExplanationThere exists an optimal tax rate to maximize government revenue.