#1
What does GDP stand for in economics?
Gross Domestic Product
ExplanationTotal value of goods and services produced within a country's borders
#2
Which of the following is not included in GDP calculation?
Savings
ExplanationGDP measures production, not saving or investment
#3
What does the term 'trade deficit' mean?
When a country imports more than it exports
ExplanationNegative balance of trade
#4
Which of the following is a component of aggregate demand (AD)?
Government spending
ExplanationTotal spending in the economy
#5
What is inflation?
An increase in the general price level of goods and services
ExplanationDecreases purchasing power over time
#6
What is the Phillips curve used to illustrate?
The relationship between unemployment and inflation
ExplanationShows the trade-off between unemployment and inflation
#7
What is the formula for calculating unemployment rate?
Number of unemployed people / Labor force
ExplanationPercentage of the labor force without employment
#8
What is the Consumer Price Index (CPI) used for?
To measure changes in the cost of living over time
ExplanationIndicates inflation's effect on consumer purchasing power
#9
What is the primary goal of monetary policy?
Stabilize prices and control inflation
ExplanationMaintain stable price levels and economic growth
#10
What is the difference between nominal GDP and real GDP?
Nominal GDP is measured in current prices, while real GDP is adjusted for inflation
ExplanationReal GDP accounts for changes in price levels
#11
What is the difference between fiscal policy and monetary policy?
Fiscal policy involves government spending and taxation, while monetary policy involves controlling the money supply and interest rates
ExplanationFiscal: government spending/taxation; Monetary: money supply/interest rates
#12
What is the Laffer curve used to illustrate?
The relationship between tax rates and tax revenue
ExplanationOptimal taxation for maximizing revenue
#13
What is the difference between recession and depression?
Recession is a mild economic downturn, while depression is a severe and prolonged economic downturn
ExplanationDifference in severity and duration of economic decline
#14
What does the term 'crowding out' refer to in economics?
Increased public sector investment leading to decreased private sector investment
ExplanationGovernment spending displacing private sector investment