#1
Which of the following is a characteristic of a market economy?
Private ownership of resources
ExplanationIndividuals own and control resources.
#2
In a command economy, who typically makes decisions regarding resource allocation?
Government authorities
ExplanationGovernment centralizes resource allocation.
#3
What is the primary goal of a business in a market economy?
Maximizing consumer satisfaction
ExplanationBusinesses aim to fulfill consumer needs and desires.
#4
Which economic concept refers to the total value of goods and services produced within a country's borders in a specific time period?
Gross domestic product (GDP)
ExplanationGDP measures a nation's economic output.
#5
What is the main function of a central bank in an economy?
To regulate interest rates
ExplanationCentral banks manage monetary policy to control interest rates.
#6
Which of the following is an example of a regressive tax?
Sales tax
ExplanationSales tax takes a higher percentage from lower-income individuals.
#7
Which economic system relies heavily on tradition and customs?
Traditional economy
ExplanationEconomic decisions are based on cultural practices.
#8
What is a key feature of a mixed economy?
Combination of private and public ownership of resources
ExplanationBoth private and public sectors play a role in resource ownership.
#9
What is the term for the cost of the next best alternative forgone when a decision is made?
Opportunity cost
ExplanationThe value of the next best alternative that is sacrificed.
#10
In a monopolistic competition market structure, how do firms differentiate their products?
By creating product differentiation
ExplanationCompanies distinguish their goods through branding and features.
#11
What is the term for the total amount of money in circulation in an economy?
Money supply
ExplanationAggregate amount of currency and liquid instruments in an economy.
#12
In which market structure do a few firms dominate the industry and exert significant control over prices?
Oligopoly
ExplanationMarket controlled by a small number of firms.
#13
In a perfectly competitive market, what happens to profits in the long run?
Profits stabilize and approach zero
ExplanationIntense competition drives profits down.
#14
Which of the following is a characteristic of a perfect competition market structure?
Homogeneous products
ExplanationProducts are identical across competitors.
#15
What is the term for the increase in the general level of prices over time?
Inflation
ExplanationRise in prices eroding purchasing power over time.
#16
What is the term for a situation where a single buyer or seller controls the market?
Monopoly
ExplanationMarket domination by one entity.
#17
Which of the following is a tool used by central banks to control the money supply?
Monetary policy
ExplanationGovernment influence over money supply and interest rates.