#1
Which of the following best describes the law of demand?
As price increases, quantity demanded decreases
ExplanationInverse relationship between price and quantity demanded.
#2
In economics, what does 'GDP' stand for?
Gross Domestic Product
ExplanationTotal value of goods and services produced in a country within a given period.
#3
What does the term 'opportunity cost' refer to?
The value of the best alternative foregone
ExplanationCost of the next best alternative when a decision is made.
#4
What is the primary goal of monetary policy?
To stabilize prices and control inflation
ExplanationControl money supply and interest rates to stabilize prices.
#5
What does the term 'ceteris paribus' mean in economics?
All other things being equal
ExplanationIsolating the effect of one variable while keeping others constant.
#6
In economics, what does 'CPI' stand for?
Consumer Price Index
ExplanationMeasure of average price changes in a basket of consumer goods and services.
#7
What is the main function of a central bank in a country's economy?
To regulate the money supply
ExplanationControl and regulate the nation's money supply and monetary policy.
#8
What is the 'invisible hand' concept in economics associated with?
Classical economics
ExplanationMarket forces guiding individuals' self-interests to benefit society.
#9
What is the formula for calculating price elasticity of demand?
Percentage change in price / Percentage change in quantity demanded
ExplanationMeasure of responsiveness of quantity demanded to price changes.
#10
Which market structure is characterized by many small firms selling differentiated products?
Monopolistic competition
ExplanationMany sellers with differentiated products but some market power.
#11
Which of the following is a fiscal policy tool used to combat inflation?
Increasing taxes
ExplanationReduce disposable income to curb spending and control inflation.
#12
Which of the following is an example of a regressive tax?
Sales tax
ExplanationTax burden falls disproportionately on low-income individuals.
#13
Which of the following is an example of a positive externality?
A homeowner installing solar panels and reducing carbon emissions
ExplanationBeneficial side effects not accounted for in market transactions.
#14
What is the 'Phillips Curve' used to illustrate?
The relationship between inflation and unemployment
ExplanationHistorical inverse relationship between unemployment and inflation.
#15
What is the 'Laffer Curve' used to depict?
The relationship between tax rates and tax revenue
ExplanationThe optimal tax rate that maximizes revenue before declining.
#16
What is the primary function of futures contracts in financial markets?
To hedge against price fluctuations
ExplanationManaging risk associated with price changes in commodities or assets.
#17
In economics, what does 'MV = PQ' represent?
Quantity theory of money
ExplanationRelationship between money supply, velocity of money, price level, and real output.