#1
Which economic system relies on supply and demand to determine prices and allocate resources?
Capitalism
ExplanationMarket-driven system where prices and resource allocation are determined by supply and demand.
#2
What is the main goal of fiscal policy?
To influence the economy through government spending and taxation
ExplanationGovernment's use of spending and taxation to manage economic conditions.
#3
What is the primary purpose of trade protectionism?
To restrict imports and protect domestic industries
ExplanationImposes barriers to imports to shield domestic industries from foreign competition.
#4
Which economic policy aims to increase the overall level of economic activity in a recession?
Expansionary fiscal policy
ExplanationGovernment increases spending or decreases taxes to boost economic activity.
#5
Which of the following is a feature of a market economy?
Private ownership of resources
ExplanationIndividuals and businesses own and control resources.
#6
Which of the following is NOT a characteristic of a command economy?
Private ownership of production
ExplanationCentralized control with no private ownership of means of production.
#7
What is the name of the economic theory that suggests government intervention in the economy should be minimal?
Austrian economics
ExplanationEmphasizes minimal government intervention in economic activities.
#8
In which economic system are the means of production collectively owned and controlled by the state?
Communism
ExplanationState ownership and control of all means of production in the economy.
#9
What is the term used to describe a situation where the market fails to allocate resources efficiently?
Market failure
ExplanationInefficiencies in resource allocation within the market.
#10
What is the primary function of the World Trade Organization (WTO)?
To promote free trade
ExplanationInternational organization encouraging global free trade and resolving trade disputes.
#11
Which of the following is a tool of monetary policy used by central banks to control the money supply?
Open market operations
ExplanationCentral banks' buying and selling of securities to regulate money supply.
#12
Which of the following is NOT a characteristic of a mixed economy?
Free market principles
ExplanationCombination of government intervention and free market principles.
#13
What is the term used to describe the total value of all goods and services produced within a country in a specific period?
Gross Domestic Product (GDP)
ExplanationMeasure of a country's economic output in a given time frame.
#14
Which of the following is NOT a component of aggregate demand?
Trade surplus
ExplanationTrade surplus is not a component but rather a result of net exports in the balance of payments.
#15
What economic indicator measures the average change in prices paid by consumers for goods and services over time?
Consumer Price Index (CPI)
ExplanationIndex tracking changes in the prices paid by consumers for a basket of goods and services.