#1
Which of the following is a fundamental principle of microeconomics?
Scarcity
ExplanationResources are limited, but desires are infinite.
#2
What does the 'law of demand' state in microeconomics?
As price increases, quantity demanded decreases
ExplanationWhen the price of a good rises, consumers buy less of it.
#3
What is the opportunity cost?
The value of the next best alternative foregone
ExplanationWhat you give up to get something else.
#4
Which of the following is a characteristic of a perfectly competitive market?
Many buyers and many sellers
ExplanationNumerous buyers and sellers with identical products.
#5
Which of the following is a characteristic of monopolistic competition?
Many buyers and few sellers
ExplanationA market structure with many firms selling similar but not identical products.
#6
What is the formula for calculating the unemployment rate?
Number of unemployed workers / Labor force
ExplanationPercentage of the labor force that is unemployed.
#7
What is the formula for calculating total revenue?
Price * Quantity
ExplanationThe total income a firm receives from selling its product.
#8
What is the equation for the GDP (Gross Domestic Product) in a closed economy?
GDP = Consumption + Investment + Government Spending + Net Exports
ExplanationThe total value of all goods and services produced within a country's borders.
#9
Which of the following is a component of aggregate demand in macroeconomics?
Consumption expenditure
ExplanationTotal spending on goods and services by households.
#10
What is the formula for calculating price elasticity of demand?
Percentage change in price / Percentage change in quantity demanded
ExplanationA measure of how much quantity demanded of a good responds to a change in price.
#11
Which of the following is a tool used by the Federal Reserve to conduct monetary policy?
Open market operations
ExplanationBuying and selling government securities to control the money supply.
#12
Which of the following is a tool used by the government for fiscal policy?
Government spending
ExplanationGovernment decisions on spending and taxation to influence the economy.
#13
What is the formula for calculating the consumer price index (CPI)?
Measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services
ExplanationA measure of inflation based on the changing prices of goods and services.
#14
What is the formula for calculating real GDP?
Nominal GDP / GDP Deflator
ExplanationThe value of goods and services produced adjusted for inflation.
#15
What does the Phillips curve depict in macroeconomics?
The relationship between inflation and unemployment
ExplanationShows an inverse relationship between inflation and unemployment rates.
#16
What is the 'crowding out effect' in macroeconomics?
An increase in government spending leads to a decrease in private investment
ExplanationWhen government spending increases, it displaces private sector investment.
#17
What is the concept of 'comparative advantage' in international trade?
A country can produce a good at a lower opportunity cost than another country
ExplanationWhen a country can produce a good at a lower cost compared to another.
#18
What is the concept of the 'Laffer curve' in economics?
It illustrates the relationship between tax rates and tax revenue
ExplanationShows the potential relationship between tax rates and tax revenue.
#19
What is the concept of 'aggregate supply' in macroeconomics?
The total quantity of goods and services that firms are willing and able to supply at a given price level
ExplanationThe total output of goods and services produced in an economy at a given price level.