Principles of Economics and Resource Allocation Quiz

Test your knowledge with 16 questions on opportunity cost, GDP, elasticity, fiscal policy, and more. Explore the intricacies of economic principles.

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Which of the following best defines opportunity cost?

The total amount of money a person earns

The value of the next best alternative foregone

The price of a good or service

The total utility gained from consuming a good or service

In economics, what does the term 'demand' refer to?

The quantity of goods producers are willing to supply at a given price

The quantity of goods consumers are willing and able to buy at a given price

The price at which a good or service is sold in the market

The amount of money consumers are willing to pay for a good or service

What does the term 'fiscal policy' refer to in economics?

Government actions to control the money supply and interest rates

Government actions to influence aggregate demand through taxation and spending

Government regulation of businesses to prevent monopolies

Government policies to promote international trade

What is the main function of the World Bank?

Providing loans and grants to developing countries for development projects

Regulating international financial markets

Setting global trade policies

Promoting environmental conservation worldwide

What does the term 'inflation' refer to in economics?

A decrease in the overall price level of goods and services

An increase in the overall price level of goods and services

A decrease in the unemployment rate

An increase in the gross domestic product (GDP)

Which of the following is NOT a factor of production?

Labor

Land

Money

Capital

Which of the following is an example of a regressive tax?

Income tax

Sales tax

Property tax

Corporate tax

What is the formula for calculating GDP (Gross Domestic Product)?

C + I + G + (X - M)

C + I + G + NX

C + I + G - NX

C + I + G - (X - M)

What is the role of the Federal Reserve in the United States?

Regulating international trade

Setting fiscal policy

Controlling the money supply and interest rates

Enforcing antitrust laws

#10

Which of the following is a characteristic of perfect competition?

Many buyers and sellers, differentiated products, and easy entry and exit

Few sellers, homogeneous products, and high barriers to entry

One seller, unique products, and complete control over prices

Many buyers and sellers, homogeneous products, and no barriers to entry

#11

What is the law of diminishing marginal utility?

As consumption of a good or service increases, the total utility derived from it decreases

As consumption of a good or service increases, the marginal utility derived from it increases

As consumption of a good or service increases, the total utility derived from it remains constant

As consumption of a good or service increases, the price of the good decreases

#12

What does the term 'comparative advantage' refer to in international trade?

The ability of a country to produce a good at a lower opportunity cost than another country

The ability of a country to produce a good using fewer resources than another country

The ability of a country to produce all goods more efficiently than another country

The ability of a country to produce a good at a higher price than another country

#13

What does the term 'elasticity' measure in economics?

The responsiveness of quantity demanded to a change in price

The total revenue earned by a firm

The level of government intervention in the market

The efficiency of resource allocation

#14

What does the 'Laffer curve' depict in economics?

The relationship between inflation and unemployment

The relationship between government spending and economic growth

The relationship between tax rates and tax revenue

The relationship between savings and investment

#15

In economics, what is the 'Phillips curve' used to illustrate?

The relationship between inflation and unemployment

The relationship between government spending and economic growth

The relationship between savings and investment

The relationship between imports and exports

#16

What is the term for a situation where one party has more information than the other party in a transaction?

Monopoly

Oligopoly

Asymmetric information

Perfect competition