#1
What is the law of demand?
As prices increase, quantity demanded decreases
ExplanationInverse relationship between price and quantity demanded
#2
What does GDP stand for?
Gross Domestic Product
ExplanationTotal monetary value of all goods and services produced within a country's borders
#3
What is a tariff?
A tax on imported goods
ExplanationImport tax levied by governments
#4
What is the main purpose of the World Trade Organization (WTO)?
To promote free trade and resolve trade disputes
ExplanationGlobal organization overseeing trade rules and negotiations
#5
What is the law of supply?
As prices increase, quantity supplied increases
ExplanationDirect relationship between price and quantity supplied
#6
Which of the following is not a determinant of demand?
Number of firms in the industry
ExplanationFactors affecting consumer demand
#7
Which of the following is a characteristic of monopolistic competition?
Many firms selling similar but not identical products
ExplanationLarge number of firms with differentiated products
#8
What is the concept of comparative advantage in trade?
Countries should produce goods for which they have the lowest opportunity cost
ExplanationBasis for international trade, emphasizing efficiency
#9
What is the formula for price elasticity of demand?
Percentage change in quantity demanded divided by percentage change in price
ExplanationMeasure of responsiveness of quantity demanded to price changes
#10
What is the difference between balance of trade and balance of payments?
Balance of trade includes only visible exports and imports, while balance of payments includes all international transactions
ExplanationDifferent scopes of accounting for a nation's economic transactions
#11
What is a production possibility frontier (PPF) used to represent?
The trade-offs between producing two different goods
ExplanationIllustration of opportunity costs in production
#12
Which of the following is an example of a regressive tax?
Sales tax
ExplanationTax disproportionately affecting low-income individuals
#13
What is the difference between a trade deficit and a budget deficit?
A trade deficit occurs when a country's imports exceed its exports, while a budget deficit occurs when a government's spending exceeds its revenue
ExplanationInternational trade imbalance vs. government financial shortfall
#14
What is the difference between absolute advantage and comparative advantage?
Absolute advantage is about producing more with fewer resources, while comparative advantage is about producing at a lower opportunity cost
ExplanationAbsolute vs. relative efficiency in production
#15
What is the difference between a fixed exchange rate and a floating exchange rate?
A fixed exchange rate is set by the government, while a floating exchange rate is determined by market forces
ExplanationGovernment control vs. market dynamics in determining currency value
#16
What is the law of comparative advantage?
Countries should specialize in producing goods for which they have the lowest opportunity cost
ExplanationBasis for efficient international trade
#17
Which of the following is not a characteristic of a perfectly competitive market?
Barriers to entry
ExplanationMarket structure with easy entry and exit for firms
#18
What is the law of increasing opportunity cost?
As production of a good increases, the opportunity cost of producing that good increases
ExplanationConcept in resource allocation
#19
Which of the following is a characteristic of a monopoly?
One firm selling a unique product with no close substitutes
ExplanationMarket structure with sole seller