Principles of Economics Quiz

Test your knowledge with these 17 questions covering basic economic concepts, market structures, fiscal and monetary policies, and more.

Practice Learn Test

What is the basic economic problem?

Scarcity

Surplus

Abundance

Equilibrium

Which of the following is NOT a factor of production?

Land

Labor

Money

Entrepreneurship

What is the difference between microeconomics and macroeconomics?

Microeconomics focuses on individual markets, while macroeconomics focuses on the economy as a whole

Microeconomics studies the behavior of individual consumers, while macroeconomics studies the behavior of firms

Microeconomics deals with international trade, while macroeconomics deals with domestic trade

Microeconomics studies short-term economic fluctuations, while macroeconomics studies long-term economic growth

What is a progressive tax?

A tax where everyone pays the same amount regardless of income

A tax where the tax rate increases as income increases

A tax where the tax rate decreases as income increases

A tax on goods and services

What is the law of supply?

As price increases, quantity supplied decreases

As price increases, quantity supplied increases

As price decreases, quantity supplied decreases

As price remains constant, quantity supplied varies

What is a subsidy?

A payment made by the government to producers to encourage production of a good

A payment made by consumers to the government for the purchase of a good

A tax imposed by the government on producers to discourage production of a good

A tax imposed by consumers to discourage consumption of a good

What does GDP stand for?

Gross Domestic Product

Gross Development Product

General Domestic Profit

Growth Demand Potential

Who is considered the 'Father of Economics'?

Adam Smith

Karl Marx

John Maynard Keynes

Milton Friedman

What is opportunity cost?

The cost of an opportunity

The value of the next best alternative forgone

The total cost of production

The cost of an opportunity divided by its benefits

#10

Which market structure is characterized by a large number of sellers with similar but not identical products?

Perfect competition

Monopoly

Oligopoly

Monopolistic competition

#11

What is the role of government in a market economy?

To control all aspects of production and distribution

To only provide national defense

To ensure a stable economic environment through regulation and intervention

To eliminate private ownership of property

#12

What is the law of diminishing marginal utility?

As the quantity of a good consumed increases, the total utility derived from consuming that good increases at a decreasing rate

As the quantity of a good consumed increases, the total utility derived from consuming that good increases at an increasing rate

As the quantity of a good consumed increases, the total utility derived from consuming that good decreases at a decreasing rate

As the quantity of a good consumed increases, the total utility derived from consuming that good remains constant

#13

What is fiscal policy?

Government policy that involves controlling the money supply and interest rates

Government policy that involves taxing and spending decisions to influence the economy

A policy that encourages foreign investment in the economy

A policy that regulates the amount of money in circulation

#14

What does the law of demand state?

As price increases, quantity demanded increases

As price increases, quantity demanded decreases

As price decreases, quantity demanded decreases

As price remains constant, quantity demanded varies

#15

What is the formula for calculating price elasticity of demand?

Percentage change in quantity demanded divided by percentage change in price

Percentage change in price divided by percentage change in quantity demanded

Change in quantity demanded multiplied by change in price

Change in price multiplied by change in quantity demanded

#16

What is the Phillips curve?

A curve showing the relationship between inflation and unemployment

A curve showing the relationship between interest rates and investment

A curve showing the relationship between government spending and GDP

A curve showing the relationship between exports and imports

#17

What is the difference between absolute advantage and comparative advantage?

Absolute advantage refers to producing more efficiently than others, while comparative advantage refers to producing at a lower opportunity cost

Absolute advantage refers to producing at a lower opportunity cost than others, while comparative advantage refers to producing more efficiently

Absolute advantage refers to producing using fewer resources than others, while comparative advantage refers to producing using more resources

Absolute advantage refers to producing goods of higher quality, while comparative advantage refers to producing goods of lower quality