Economics Basics and Trade Principles Quiz

Resources are limited, and human wants are unlimited, leading to the fundamental issue of scarcity.

Consumers tend to buy more of a good when its price falls.

Communism is a socio-political system, not a market structure like monopoly or oligopoly.

GDP is the total value of all goods and services produced within a country's borders.

Tariffs are taxes on imported goods, influencing trade between countries.

A budget deficit occurs when a government spends more money than it collects in revenue.

Exchange rates determine the value of one currency in terms of another.

Perfectly competitive markets feature numerous small firms with no individual market power.

Countries benefit from specializing in producing goods where they have a comparative advantage.

Externalities are spillover effects impacting parties not directly involved in a transaction.

Beyond a point, adding more units of input leads to smaller increases in output.

Opportunity cost represents the value of the best alternative sacrificed when making a choice.

The expenditure approach calculates GDP by summing consumption, investment, government spending, and net exports.

Microeconomics studies individual economic units, while macroeconomics examines the overall economy.

The Phillips Curve depicts a trade-off between inflation and unemployment rates.

The invisible hand refers to the market's ability to allocate resources efficiently without central coordination.

The Laffer Curve illustrates the trade-off between tax rates and tax revenue, suggesting an optimal tax rate for maximizing revenue.

The tragedy of the commons occurs when individuals exploit shared resources, leading to depletion.