#1
Which of the following is an example of a fiscal policy measure?
Increasing government spending on infrastructure
ExplanationFiscal policy involves government spending and taxation to influence the economy.
#2
What is the term used to describe a situation where a single buyer controls the market?
Monopsony
ExplanationMonopsony is when there's a single buyer influencing the market.
#3
Which of the following is an example of a supply-side policy?
Reducing income taxes
ExplanationSupply-side policies aim to stimulate economic growth by boosting production.
#4
What is the term for the total value of all goods and services produced within a country's borders in a specific time period?
Gross Domestic Product (GDP)
ExplanationGDP measures the economic output of a nation.
#5
In the context of economic policy, what does 'austerity' refer to?
Reduction in government spending and/or increase in taxes
ExplanationAusterity involves cutting government spending and/or raising taxes to reduce deficits.
#6
What is the primary goal of government intervention in a market economy?
To correct market failures
ExplanationGovernment intervenes to address inefficiencies in markets.
#7
Which of the following is an example of a price ceiling?
Rent control regulations
ExplanationPrice ceilings set maximum prices, as in rent control.
#8
Which of the following is NOT a characteristic of a perfectly competitive market?
Price setting power for individual firms
ExplanationPerfectly competitive markets have no individual firm influencing prices.
#9
What is the term for a situation where the production of a good has a negative impact on a third party not involved in the transaction?
Externality
ExplanationExternality occurs when third parties are affected by production.
#10
Which of the following is a goal of trade protectionism?
Protecting domestic industries
ExplanationTrade protectionism aims to shield domestic industries from foreign competition.
#11
What is the 'Laffer curve' used to illustrate in economics?
The relationship between tax rates and government revenue
ExplanationLaffer curve shows how tax rates affect government revenue.
#12
Which of the following is NOT a tool of monetary policy?
Fiscal deficit
ExplanationFiscal deficit is a result of government spending and taxation, not a tool of monetary policy.
#13
In the context of trade policy, what does 'dumping' refer to?
Selling goods in foreign markets at a price below production cost
ExplanationDumping is selling goods abroad below production costs, often to gain market share.
#14
Which of the following is a characteristic of a regressive tax system?
Tax rate decreases as income increases
ExplanationRegressive taxes take a higher proportion of income from lower earners.
#15
Which of the following is NOT a characteristic of a public good?
Excludability
ExplanationPublic goods are non-excludable and non-rivalrous.