Factors Influencing Economic Activity Quiz

Inflation, as a sustained increase in the general price level, can impact consumer purchasing power and affect economic activity.

Gross Domestic Product (GDP) is a measure of the total value of goods and services produced within a country's borders, reflecting economic activity.

Capitalism is an economic system characterized by private ownership of the means of production and a market-driven approach where supply and demand determine prices and production.

The Supply Curve in economics illustrates the relationship between the quantity of a good that producers are willing to produce and the price of that good.

Monopoly is an economic term describing a situation where a market has only one seller, allowing that seller to control the entire supply of a product or service.

The Consumer Price Index (CPI) measures the average change in prices of goods and services over time, providing an indicator of the inflation rate.

The Laffer Curve illustrates the relationship between tax rates and government revenue, suggesting that there is an optimal tax rate for maximizing revenue.

The unemployment rate is an economic indicator that measures the percentage of the labor force without employment, reflecting the health of the job market.

The Comparative Advantage theory suggests that countries should specialize in producing goods or services where they have a lower opportunity cost, promoting efficient international trade.

Opportunity Cost refers to the value of the best alternative forgone when a decision is made, representing the cost of choosing one option over another.

Technological innovation is a supply-side factor that can enhance productivity and contribute to economic growth.

The money supply, controlled by central banks, can impact economic activity by either stimulating growth through increased money circulation or slowing it down through reduced money supply.

The Multiplier Effect refers to the magnifying impact on economic output resulting from an initial change in spending, often associated with fiscal policy.

Central banks influence economic activity by controlling the money supply and interest rates, impacting borrowing, spending, and overall economic conditions.

Keynesian economics advocates government intervention to address market failures and promote social welfare through fiscal and monetary policies.