#1
Which of the following best defines the law of supply?
As prices increase, quantity supplied increases.
ExplanationLaw stating that as prices rise, suppliers are willing to produce more goods.
#2
What does GDP stand for in economics?
Gross Domestic Product
ExplanationTotal value of all goods and services produced within a country's borders.
#3
According to the law of demand, what happens to the quantity demanded of a good when its price decreases, assuming all other factors remain constant?
It increases
ExplanationPrinciple stating a decrease in price leads to higher demand.
#4
What is the concept of 'opportunity cost' in economics?
The value of the next best alternative foregone when a choice is made
ExplanationCost of choosing one option over another, measured by the benefits foregone.
#5
Which economic system is characterized by private ownership of resources and decentralized decision-making?
Capitalism
ExplanationEconomic system where private entities control production and distribution.
#6
What is the term for a sustained increase in the general price level of goods and services in an economy?
Inflation
ExplanationContinuous rise in prices leading to decreased purchasing power.
#7
Which economic principle states that as more units of a good are consumed, the additional utility from each additional unit decreases?
Marginal Utility
ExplanationConcept stating the diminishing satisfaction as consumption of a good increases.
#8
What is the term for the total value of goods and services produced within a country's borders in a specific time period?
Gross Domestic Product (GDP)
ExplanationAggregate measure of economic output within a nation over a set time.
#9
What is the primary function of the Federal Reserve System in the United States?
Monetary policy implementation
ExplanationCentral bank's role in managing money supply and interest rates.
#10
What does the term 'invisible hand' refer to in economics?
Natural market forces guiding self-interest toward societal benefit
ExplanationConcept describing self-regulating nature of markets driven by self-interest.
#11
In the context of international trade, what is a tariff?
A tax imposed on imported goods
ExplanationTax levied on imported products to protect domestic industries.
#12
What is the difference between microeconomics and macroeconomics?
Microeconomics studies individual markets, while macroeconomics studies the economy as a whole.
ExplanationMicroeconomics focuses on individual units, whereas macroeconomics examines aggregates.
#13
In economics, what is the term for a situation where resources are allocated in the most efficient manner to maximize overall economic output?
Efficiency
ExplanationAllocation of resources to achieve maximum productivity.