#1
Which of the following best defines opportunity cost?
The value of the next best alternative foregone
ExplanationValue of what is given up when choosing one option over another
#2
What does GDP stand for in economics?
Gross Domestic Product
ExplanationTotal value of all goods and services produced within a country's borders in a specific time period
#3
Which of the following is NOT considered a factor of production?
Money
ExplanationMedium of exchange, not used in the production process
#4
What is the economic concept that describes the increase in the price level of goods and services over time?
Inflation
ExplanationDecrease in purchasing power of a currency over time
#5
What is fiscal policy?
The use of government spending and taxation to influence the economy
ExplanationGovernment's use of spending and taxation to influence economic conditions
#6
Which of the following is a tool used by central banks to control the money supply?
Interest rates
ExplanationRate at which money is borrowed or lent
#7
Which economic principle states that as production increases, the marginal cost of production tends to increase?
Law of Diminishing Returns
ExplanationAs more units of a variable input are added to a fixed input, at some point the marginal product of the variable input decreases
#8
In economics, what does the term 'elasticity' refer to?
The responsiveness of quantity demanded to changes in price
ExplanationMeasure of how sensitive quantity demanded is to a change in price
#9
What is the formula for calculating the unemployment rate?
Number of unemployed / Labor force
ExplanationPercentage of the labor force that is unemployed
#10
What does the term 'comparative advantage' refer to in economics?
The ability of a country to produce a good at a lower opportunity cost than another country
ExplanationAbility to produce a good at a lower cost than another producer
#11
Which economic system is characterized by private ownership of resources and decentralized decision-making?
Capitalism
ExplanationEconomic system where means of production are privately owned and operated for profit
#12
What is the law of diminishing marginal utility?
As the quantity consumed of a good increases, the satisfaction derived from each additional unit decreases
ExplanationDecrease in additional satisfaction from consuming more of a good
#13
What is the Tragedy of the Commons in economics?
A situation where resources are overutilized due to individual self-interest
ExplanationOveruse of common resources due to lack of property rights