Principles of Economics and Resource Allocation Quiz

Opportunity cost is the value of the next best alternative foregone when a choice is made.

Demand in economics represents the quantity of goods consumers are willing and able to buy at a given price.

Fiscal policy involves government actions to impact aggregate demand by adjusting taxation and spending.

The World Bank primarily provides financial support to developing countries through loans and grants for development projects.

Inflation in economics refers to the general increase in the price level of goods and services in an economy.

Money is not considered a factor of production; it is a medium of exchange.

A regressive tax, like sales tax, takes a higher percentage of income from low-income earners than from high-income earners.

GDP is calculated by summing up consumption (C), investment (I), government spending (G), and net exports (NX).

The Federal Reserve's role involves controlling the money supply and interest rates to maintain economic stability.

Perfect competition features many buyers and sellers, identical products, and no obstacles for new entries.

The law of diminishing marginal utility states that as the consumption of a good or service rises, the additional satisfaction or utility derived from each additional unit decreases.

Comparative advantage is the ability of a country to produce a good at a lower opportunity cost than another country.

Elasticity in economics measures how much quantity demanded responds to a change in price.

The Laffer curve illustrates the relationship between tax rates and the resulting tax revenue.

The Phillips curve illustrates the inverse relationship between inflation and unemployment.

Asymmetric information refers to a situation where one party in a transaction possesses more information than the other party.