#1
Which of the following is an example of a trade-off in economics?
Decreasing unemployment while increasing inflation
ExplanationBalancing the reduction of unemployment against the rise in inflation.
#2
What does the term 'opportunity cost' refer to in economics?
The highest-valued alternative that is sacrificed to choose one option over another
ExplanationThe value of the next best alternative foregone when a choice is made.
#3
In the production possibilities frontier (PPF) model, what does a point inside the frontier indicate?
Inefficient use of resources
ExplanationUtilizing resources below their maximum potential, leading to inefficiency.
#4
Which of the following is NOT a characteristic of a perfectly competitive market?
Barriers to entry
ExplanationAbsence of restrictions preventing new firms from entering the market.
#5
What is the role of the central bank in managing monetary policy?
To manage the money supply and interest rates
ExplanationRegulating the supply of money and influencing interest rates to stabilize the economy.
#6
Which of the following is a characteristic of a monopolistic competition market structure?
Product differentiation among firms
ExplanationDistinguishing products to create perceived differences in a competitive market.
#7
What is the concept of diminishing marginal utility in economics?
As consumption of a good increases, the additional satisfaction gained from each additional unit decreases
ExplanationThe decrease in added satisfaction from consuming more units of a product.
#8
In economics, what is the 'Laffer curve' used to illustrate?
The relationship between tax rates and tax revenue
ExplanationGraphical representation showing how tax rates affect government revenue.
#9
What is the 'Phillips curve' in macroeconomics?
A graphical representation showing the relationship between inflation and unemployment
ExplanationIllustrates the inverse relationship between inflation and unemployment rates.
#10
What is 'stagflation' in macroeconomics?
A situation where inflation is high, economic growth is low, and unemployment is high
ExplanationSimultaneous occurrence of high inflation, low economic growth, and high unemployment.
#11
What is the 'Tragedy of the Commons' concept in economics?
A situation where individuals overconsume resources leading to depletion and eventual collapse
ExplanationOverexploitation of shared resources due to self-interest, resulting in resource depletion.