Economics 2024/2025 Trial Test Questions (50) Objective Questions ( Test 16)

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Select the correct options for each Questions below

1. What is the difference between microeconomics and macroeconomics?

a) Microeconomics focuses on individual consumers and firms, while macroeconomics examines the economy as a whole. b) Microeconomics studies large-scale economic phenomena, while macroeconomics deals with smaller, localized issues. c) Microeconomics studies the economy as a whole, while macroeconomics focuses on individual consumers and firms. d) There is no difference between microeconomics and macroeconomics.

2. Which of the following is an example of a perfectly competitive market?

a) Monopoly b) Oligopoly c) Monopolistic competition d) Agriculture

3. Which of the following is NOT considered a factor of production?

a) Land b) Labor c) Capital d) Demand

4. What is the opportunity cost of a decision?

a) The value of the next best alternative forgone b) The cost of the chosen option c) The monetary value of the decision d) The total cost of all alternatives

5. What does the term "elasticity" refer to in economics?

a) The responsiveness of quantity demanded or supplied to a change in price b) The ability of a good to satisfy human wants c) The total utility derived from consuming a good d) The proportion of income spent on a good or service

6. What is the main function of the central bank in a country?

a) To regulate commercial banks b) To provide loans to the government c) To conduct monetary policy d) To manage fiscal policy

7. What is the difference between fiscal policy and monetary policy?

a) Fiscal policy involves government spending and taxation, while monetary policy involves central bank actions on interest rates and money supply. b) Fiscal policy is controlled by the central bank, while monetary policy is controlled by the government. c) Fiscal policy focuses on inflation, while monetary policy focuses on unemployment. d) There is no difference between fiscal policy and monetary policy.

8. What is the formula for calculating GDP using the expenditure approach?

a) GDP = Consumption + Investment + Government Spending + Net Exports b) GDP = Consumption + Investment + Government Spending - Net Exports c) GDP = Consumption + Investment - Government Spending + Net Exports d) GDP = Consumption - Investment + Government Spending + Net Exports

9. What is the meaning of the term "inflation" in economics?

a) A decrease in the general level of prices b) The total value of all final goods and services produced within a country's borders c) An increase in the general level of prices d) The total value of all intermediate goods and services produced within a country's borders

10. What is the difference between absolute advantage and comparative advantage?

a) Absolute advantage refers to the ability to produce a good at a lower opportunity cost, while comparative advantage refers to the ability to produce a good using fewer inputs. b) Absolute advantage refers to the ability to produce a good using fewer inputs, while comparative advantage refers to the ability to produce a good at a lower opportunity cost. c) There is no difference between absolute advantage and comparative advantage. d) Absolute advantage and comparative advantage are the same concept.

11. Define the term "monopoly" in economics.

a) A market structure with many sellers and differentiated products b) A market structure with only one seller controlling the entire market c) A market structure with a few sellers offering identical or differentiated products d) A market structure with many buyers and sellers where no single buyer or seller can influence the market price

12. What is the law of demand?

a) As price increases, quantity demanded decreases, ceteris paribus b) As price decreases, quantity demanded decreases, ceteris paribus c) As price increases, quantity demanded increases, ceteris paribus d) As price remains constant, quantity demanded changes

13. What is a public good?

a) A good that is excludable but non-rivalrous in consumption b) A good that is non-excludable and non-rivalrous in consumption c) A good that is excludable and rivalrous in consumption d) A good that is non-excludable but rivalrous in consumption

14. What is the difference between a progressive tax and a regressive tax?

a) A progressive tax takes a higher percentage of income from high-income earners, while a regressive tax takes a higher percentage from low-income earners. b) A regressive tax takes a higher percentage of income from high-income earners, while a progressive tax takes a higher percentage from low-income earners. c) A progressive tax charges the same rate to all taxpayers, while a regressive tax charges different rates based on income levels. d) A progressive tax charges different rates based on income levels, while a regressive tax charges the same rate to all taxpayers.

15. What is the law of diminishing marginal utility?

a) As a consumer consumes more of a good, the additional satisfaction derived from each additional unit of the good decreases. b) As a consumer consumes more of a good, the total satisfaction derived from the good increases. c) As a consumer consumes more of a good, the price of the good increases. d) As a consumer consumes more of a good, the demand for the good increases.

16. What is the meaning of the term "externalities" in economics?

a) Costs or benefits of a transaction that affect people who are not directly involved in the transaction b) Costs or benefits of a transaction that affect only the buyer and the seller c) Costs or benefits of a transaction that are internal to the buyer and the seller d) Costs or benefits of a transaction that do not affect anyone

17. What is the formula for calculating price elasticity of demand?

a) Percentage change in quantity demanded / Percentage change in price b) Percentage change in price / Percentage change in quantity demanded c) Change in quantity demanded / Change in price d) Change in price / Change in quantity demanded

18. What is the meaning of the term "deflation" in economics?

a) A decrease in the general level of prices b) An increase in the general level of prices c) A situation where the economy experiences high inflation rates d) A situation where the economy experiences low unemployment rates

19. What is the formula for calculating average variable cost (AVC)?

a) Total variable cost / Quantity of output b) Total variable cost - Quantity of output c) Total variable cost + Quantity of output d) Total variable cost * Quantity of output

20. What is the difference between a recession and a depression?

a) A recession is a prolonged period of economic decline, while a depression is a severe and prolonged recession with high unemployment and low production levels. b) A recession is a short-term economic downturn, while a depression is a long-term economic expansion. c) A recession is characterized by high inflation rates, while a depression is characterized by low inflation rates. d) A recession is a period of economic growth, while a depression is a period of economic contraction.

21. What is the Phillips Curve?

a) A curve showing the relationship between inflation and unemployment b) A curve showing the relationship between interest rates and investment c) A curve showing the relationship between government spending and economic growth d) A curve showing the relationship between consumption and income

22. What is the role of the World Trade Organization (WTO)?

a) To regulate international financial markets b) To promote free trade by setting rules and resolving disputes among member countries c) To provide loans to developing countries for infrastructure projects d) To control exchange rates between member countries

23. What is the meaning of the term "oligopoly" in economics?

a) A market structure with many sellers and differentiated products b) A market structure with only one seller controlling the entire market c) A market structure with a few sellers offering identical or differentiated products d) A market structure with many buyers and sellers where no single buyer or seller can influence the market price

24. What is the meaning of the term "monetary policy"?

a) Government policies aimed at managing the money supply and interest rates to achieve macroeconomic objectives b) Government policies aimed at controlling inflation through fiscal measures c) Government policies aimed at redistributing income and wealth d) Government policies aimed at regulating international trade

25. What is the meaning of the term "marginal cost"?

a) The change in total cost resulting from a one-unit change in output b) The additional cost of producing one more unit of output c) The cost of the last unit produced d) The total cost divided by the quantity of output

26. What is the meaning of the term "liquidity"?

a) The ease with which an asset can be converted into cash without affecting its market price b) The total value of all final goods and services produced within a country's borders c) The ability of a good to satisfy human wants d) The proportion of income spent on a good or service

27. What is the difference between the balance of trade and the balance of payments?

a) The balance of trade measures only goods and services, while the balance of payments measures all economic transactions between residents and non-residents of a country. b) The balance of trade measures all economic transactions between residents and non-residents of a country, while the balance of payments measures only goods and services. c) The balance of trade focuses on imports, while the balance of payments focuses on exports. d) The balance of trade measures the financial flows between countries, while the balance of payments measures the physical flows.

28. What is the meaning of the term "utility" in economics?

a) The total value of all intermediate goods and services produced within a country's borders b) The total satisfaction or benefit derived from consuming a good or service c) The responsiveness of quantity demanded or supplied to a change in price d) The ability of a good to satisfy human wants

29. What is the meaning of the term "comparative advantage"?

a) The ability to produce a good using fewer inputs than another producer b) The ability to produce a good at a lower opportunity cost than another producer c) The ability to produce a good at a lower cost than another producer d) The ability to produce a good using more inputs than another producer

30. What is the meaning of the term "demand curve"?

a) A curve showing the relationship between price and quantity supplied b) A curve showing the relationship between price and quantity demanded c) A curve showing the relationship between income and consumption d) A curve showing the relationship between income and savings

31. What is the meaning of the term "gross domestic product (GDP)"?

a) The total value of all intermediate goods and services produced within a country's borders b) The total value of all final goods and services produced within a country's borders c) The total value of all goods and services produced by a country's citizens, regardless of where they are located d) The total value of all goods and services consumed within a country's borders

32. What is the meaning of the term "supply curve"?

a) A curve showing the relationship between price and quantity supplied b) A curve showing the relationship between price and quantity demanded c) A curve showing the relationship between income and consumption d) A curve showing the relationship between income and savings

33. What is the meaning of the term "elasticity of demand"?

a) The responsiveness of quantity demanded to a change in price b) The responsiveness of quantity supplied to a change in price c) The responsiveness of price to a change in quantity demanded d) The responsiveness of price to a change in quantity supplied

34. What is the meaning of the term "opportunity cost"?

a) The total cost of producing a good or service b) The cost of the next best alternative foregone when a decision is made c) The total value of all goods and services produced within a country's borders d) The total value of all final goods and services produced within a country's borders

35. What is the meaning of the term "perfect competition"?

a) A market structure with many sellers and differentiated products b) A market structure with only one seller controlling the entire market c) A market structure with a few sellers offering identical or differentiated products d) A market structure with many buyers and sellers where no single buyer or seller can influence the market price

36. What is the meaning of the term "monopoly"?

a) A market structure with many sellers and differentiated products b) A market structure with only one seller controlling the entire market c) A market structure with a few sellers offering identical or differentiated products d) A market structure with many buyers and sellers where no single buyer or seller can influence the market price

37. What is the meaning of the term "economic growth"?

a) An increase in the general level of prices b) A situation where the economy experiences high inflation rates c) A situation where the economy experiences low unemployment rates d) An increase in the real output of goods and services over time

38. What is the meaning of the term "inflation"?

a) A decrease in the general level of prices b) An increase in the general level of prices c) A situation where the economy experiences high unemployment rates d) A situation where the economy experiences low inflation rates

39. What is the meaning of the term "fiscal policy"?

a) Government policies aimed at managing the money supply and interest rates to achieve macroeconomic objectives b) Government policies aimed at controlling inflation through fiscal measures c) Government policies aimed at redistributing income and wealth d) Government policies aimed at regulating international trade

40. What is the meaning of the term "market equilibrium"?

a) A situation where the quantity supplied exceeds the quantity demanded b) A situation where the quantity demanded exceeds the quantity supplied c) A situation where the price is too low to cover the cost of production d) A situation where the quantity demanded equals the quantity supplied, resulting in no shortage or surplus

41. What is the meaning of the term "externalities" in economics?

a) Costs or benefits that affect individuals or groups who are not directly involved in the production or consumption of a good or service b) The difference between total revenue and total cost c) The total value of all final goods and services produced within a country's borders d) The difference between a firm's total revenue and its explicit costs

42. What is the meaning of the term "elasticity of supply"?

a) The responsiveness of quantity demanded to a change in price b) The responsiveness of quantity supplied to a change in price c) The responsiveness of price to a change in quantity demanded d) The responsiveness of price to a change in quantity supplied

43. What is the meaning of the term "market failure"?

a) A situation where the quantity supplied exceeds the quantity demanded b) A situation where the quantity demanded exceeds the quantity supplied c) A situation where the price is too low to cover the cost of production d) A situation where the market fails to allocate resources efficiently

44. What is the meaning of the term "public goods"?

a) Goods that are rival in consumption and exclusive to those who pay for them b) Goods that are non-rival in consumption and non-exclusive to those who pay for them c) Goods that are rival in consumption and non-exclusive to those who pay for them d) Goods that are non-rival in consumption and exclusive to those who pay for them

45. What is the meaning of the term "market power"?

a) The ability of a firm to influence the market price of its product b) The ability of a firm to produce at a lower cost than its competitors c) The ability of a firm to control the market supply of its product d) The ability of a firm to maximize its profits

46. What is the meaning of the term "marginal revenue"?

a) The change in total revenue resulting from a one-unit change in output b) The additional revenue earned from selling one more unit of output c) The total revenue divided by the quantity of output d) The total revenue minus the total cost

47. What is the meaning of the term "regressive tax"?

a) A tax where the average tax rate decreases as income increases b) A tax where the average tax rate remains constant as income increases c) A tax where the average tax rate increases as income increases d) A tax where the marginal tax rate increases as income increases

48. What is the meaning of the term "monetary policy"?

a) Government policies aimed at managing the money supply and interest rates to achieve macroeconomic objectives b) Government policies aimed at controlling inflation through fiscal measures c) Government policies aimed at redistributing income and wealth d) Government policies aimed at regulating international trade

49. What is the meaning of the term "demand-pull inflation"?

a) Inflation caused by increases in the cost of production b) Inflation caused by excessive demand in relation to supply c) Inflation caused by decreases in consumer spending d) Inflation caused by decreases in the money supply

50. What is the meaning of the term "cost-push inflation"?

a) Inflation caused by increases in the cost of production b) Inflation caused by excessive demand in relation to supply c) Inflation caused by decreases in consumer spending d) Inflation caused by decreases in the money supply