#1
Which of the following best describes the concept of scarcity in economics?
It refers to the unlimited wants and needs of society compared to limited resources.
ExplanationScarcity arises due to the imbalance between unlimited human wants and limited resources.
#2
What does GDP stand for in economics?
Gross Domestic Product
ExplanationGDP measures the total value of all goods and services produced within a country's borders.
#3
In economics, what does the term 'opportunity cost' refer to?
The cost of the next best alternative forgone when a decision is made.
ExplanationOpportunity cost represents the benefits lost when one choice is made over another.
#4
What is the law of demand in economics?
As the price of a good increases, the quantity demanded decreases, and vice versa.
ExplanationThe law of demand reflects the inverse relationship between price and quantity demanded.
#5
What is the difference between microeconomics and macroeconomics?
Microeconomics focuses on individual markets and firms, while macroeconomics focuses on the economy as a whole.
ExplanationMicroeconomics studies the behavior of individual economic units, while macroeconomics analyzes aggregate economic phenomena.
#6
What is fiscal policy in economics?
The policy that regulates government spending and taxation to influence the economy.
ExplanationFiscal policy involves government actions aimed at influencing aggregate demand through taxation and spending.
#7
What is the concept of comparative advantage in international trade?
It refers to a country's ability to produce a good at a lower opportunity cost than another country.
ExplanationComparative advantage explains why countries specialize in producing goods in which they have a lower opportunity cost.
#8
What is the difference between nominal GDP and real GDP?
Real GDP is adjusted for inflation, while nominal GDP is not.
ExplanationReal GDP accounts for changes in price levels over time, providing a more accurate measure of economic output than nominal GDP.
#9
Which of the following is NOT considered one of the factors of production in economics?
Money
ExplanationMoney is a medium of exchange and not a factor of production like land, labor, and capital.
#10
What is the formula for calculating elasticity of demand?
Percentage change in quantity demanded divided by percentage change in price.
ExplanationElasticity of demand measures the responsiveness of quantity demanded to changes in price.
#11
What is the Tragedy of the Commons in economics?
The depletion of common resources due to individuals pursuing their own self-interest.
ExplanationThe Tragedy of the Commons illustrates the overuse and degradation of shared resources when individuals act in their self-interest.
#12
What is the Phillips curve in economics?
A curve that shows the relationship between inflation and unemployment.
ExplanationThe Phillips curve depicts the trade-off between inflation and unemployment rates.
#13
What is the concept of the multiplier effect in economics?
The effect of an initial change in spending resulting in a larger change in aggregate demand.
ExplanationThe multiplier effect magnifies changes in spending, leading to a greater impact on economic activity.
#14
What is the concept of perfect competition in economics?
A market structure with many buyers and sellers, homogeneous products, and no barriers to entry or exit.
ExplanationPerfect competition represents an ideal market structure with conditions such as perfect information, identical products, and ease of entry and exit for firms.