#1
Which of the following best defines economics?
The study of how societies allocate scarce resources to satisfy unlimited wants
ExplanationEconomics studies resource allocation amidst unlimited wants.
#2
What is the law of demand?
As the price of a good increases, quantity demanded decreases
ExplanationPrice increase leads to demand decrease.
#3
What is the law of supply?
As the price of a good increases, quantity supplied increases
ExplanationPrice increase leads to supply increase.
#4
What is inflation?
An increase in the overall price level of goods and services
ExplanationInflation is a rise in overall price levels.
#5
What is the formula for calculating GDP (Gross Domestic Product)?
GDP = Consumption + Investment + Government Spending + Net Exports
ExplanationGDP comprises consumption, investment, government spending, and net exports.
#6
What is the concept of opportunity cost?
The cost of an alternative that must be forgone in order to pursue a certain action
ExplanationOpportunity cost is the cost of foregone alternatives.
#7
What is the law of diminishing marginal utility?
The more you consume of a product, the less satisfaction (utility) you derive from each additional unit
ExplanationIncreasing consumption yields decreasing satisfaction.
#8
What is fiscal policy?
Government policies that aim to stabilize the economy through changes in taxation and government spending
ExplanationFiscal policy adjusts taxation and spending for economic stability.
#9
What is the difference between microeconomics and macroeconomics?
Microeconomics studies individual markets and economic agents, while macroeconomics studies the economy as a whole
ExplanationMicro focuses on individual markets; macro focuses on the whole economy.
#10
What is the Phillips curve?
A curve illustrating the relationship between inflation and unemployment
ExplanationPhillips curve shows inflation-unemployment relationship.
#11
What is the difference between absolute advantage and comparative advantage?
Absolute advantage refers to the ability of a country to produce more of a good using fewer resources, while comparative advantage refers to the ability to produce a good at a lower opportunity cost
ExplanationAbsolute: more with less; Comparative: lower opportunity cost.
#12
What is the difference between monetary policy and fiscal policy?
Monetary policy refers to government policies that control the money supply and interest rates, while fiscal policy refers to government policies that regulate taxation and government spending
ExplanationMonetary: money supply and rates; Fiscal: taxation and spending.