#1
What does GDP stand for in economics?
Gross Domestic Product
ExplanationGDP measures the total value of goods and services produced in a country.
#2
What is the concept of 'opportunity cost' in economics?
The value of the next best alternative that is forgone
ExplanationOpportunity cost is the value of the best alternative foregone when a decision is made.
#3
Which of the following is NOT a component of aggregate demand?
Exports
ExplanationExports are not part of aggregate demand, which includes consumption, investment, government spending, and net exports.
#4
What does the Phillips Curve illustrate?
The relationship between unemployment and inflation
ExplanationThe Phillips Curve shows the trade-off between inflation and unemployment; as one decreases, the other tends to increase.
#5
Which of the following is a tool of monetary policy used by central banks?
Open market operations
ExplanationCentral banks use open market operations to buy or sell government securities to control the money supply.
#6
What is the formula for calculating the unemployment rate?
Unemployment rate = Unemployed workers / Labor force
ExplanationThe unemployment rate is the percentage of unemployed workers in the labor force.
#7
What is the primary function of the Federal Reserve System in the United States?
Conducting monetary policy
ExplanationThe Federal Reserve manages the money supply and implements monetary policy to achieve economic stability.
#8
What does the term 'stagflation' refer to in economics?
A situation of high inflation and high unemployment
ExplanationStagflation is characterized by stagnant economic growth, high inflation, and high unemployment.
#9
What is the concept of 'crowding out' in macroeconomics?
An increase in government spending leading to a decrease in private investment
ExplanationCrowding out occurs when increased government spending reduces private sector investment.
#10
What is the Laffer Curve used to illustrate in economics?
The relationship between tax rates and tax revenue
ExplanationThe Laffer Curve shows the potential impact of tax rates on government tax revenue.
#11
What does the term 'stagflation' refer to in macroeconomics?
A period of low economic growth and high inflation
ExplanationStagflation refers to an economic situation characterized by both slow economic growth and high inflation.