Graphs

Question 1

What does a demand curve illustrate?

Answer 1

The relationship between the price of a good and the quantity demanded.

Question 2

True or False: A shift to the right in the demand curve indicates an increase in demand.

Answer 2

True

Question 3

Fill in the blank: The point where the demand and supply curves intersect is called the ________.

Answer 3

equilibrium

Question 4

What does a supply curve represent?

Answer 4

The relationship between the price of a good and the quantity supplied.

Question 5

What happens to equilibrium price when demand increases?

Answer 5

It typically rises.

Question 6

Multiple Choice: Which of the following factors can cause a shift in the supply curve? A) Consumer preferences B) Technology C) Population D) Income

Answer 6

B) Technology

Question 7

What is the effect of a price ceiling on a market?

Answer 7

It can lead to a shortage.

Question 8

True or False: A price floor can result in a surplus.

Answer 8

True

Question 9

What does the concept of elasticity measure?

Answer 9

The responsiveness of quantity demanded or supplied to changes in price.

Question 10

Fill in the blank: If the price elasticity of demand is greater than 1, demand is considered ________.

Answer 10

elastic

Question 11

Multiple Choice: Which type of good has a negative cross-price elasticity? A) Substitutes B) Complements C) Normal goods D) Inferior goods

Answer 11

B) Complements

Question 12

What is the definition of consumer surplus?

Answer 12

The difference between what consumers are willing to pay and what they actually pay.

Question 13

True or False: Producer surplus is the area above the supply curve and below the market price.

Answer 13

True

Question 14

What does a negative externality result in?

Answer 14

A market failure where social costs exceed private costs.

Question 15

Fill in the blank: The ________ curve shows the marginal social cost of production.

Answer 15

supply

Question 16

What is the purpose of a subsidy?

Answer 16

To encourage production or consumption of a good.

Question 17

Multiple Choice: Which graph represents a perfectly inelastic demand? A) Vertical line B) Downward sloping line C) Upward sloping line D) Horizontal line

Answer 17

A) Vertical line

Question 18

What does a Lorenz curve illustrate?

Answer 18

Income distribution within a population.

Question 19

True or False: A Gini coefficient of 0 represents perfect equality.

Answer 19

True

Question 20

What is the impact of a tax on a good?

Answer 20

It shifts the supply curve upwards.

Question 21

Fill in the blank: The ________ curve reflects the marginal benefit to consumers.

Answer 21

demand

Question 22

Multiple Choice: Which of the following is not a factor of production? A) Land B) Labor C) Capital D) Money

Answer 22

D) Money

Question 23

What does the production possibilities frontier (PPF) show?

Answer 23

The maximum possible output combinations of two goods.

Question 24

True or False: Points inside the PPF represent inefficient use of resources.

Answer 24

True

Question 25

What does a shift of the PPF outward indicate?

Answer 25

Economic growth.

Question 26

Fill in the blank: The opportunity cost is the value of the next best ________ foregone.

Answer 26

alternative

Question 27

Multiple Choice: Which type of market structure has many firms and free entry and exit? A) Monopoly B) Oligopoly C) Perfect competition D) Monopolistic competition

Answer 27

C) Perfect competition

Question 28

What is the main characteristic of a monopoly?

Answer 28

Single seller with no close substitutes.

Question 29

True or False: In monopolistic competition, firms can set prices above marginal cost.

Answer 29

True

Question 30

What does the concept of diminishing returns imply?

Answer 30

Adding more of one factor of production while holding others constant will eventually yield lower per-unit returns.

Question 31

Fill in the blank: The long-run average cost curve is typically ________ shaped.

Answer 31

U

Question 32

Multiple Choice: Which of the following is a characteristic of an oligopoly? A) Homogeneous products B) Price takers C) Few sellers D) Perfect information

Answer 32

C) Few sellers

Question 33

What is the primary goal of firms in a capitalist economy?

Answer 33

To maximize profits.

Question 34

True or False: Market failure occurs when the allocation of resources is not efficient.

Answer 34

True

Question 35

What is the role of the central bank in an economy?

Answer 35

To manage monetary policy and control inflation.

Question 36

Fill in the blank: The interest rate is the cost of ________ money.

Answer 36

borrowing

Question 37

Multiple Choice: Which of the following is a tool of monetary policy? A) Taxation B) Government spending C) Open market operations D) Price controls

Answer 37

C) Open market operations

Question 38

What is fiscal policy primarily concerned with?

Answer 38

Government spending and taxation.

Question 39

True or False: Expansionary fiscal policy is used to stimulate economic growth.

Answer 39

True

Question 40

What is the difference between nominal and real GDP?

Answer 40

Nominal GDP is measured at current prices, while real GDP is adjusted for inflation.

Question 41

Fill in the blank: The GDP deflator measures the level of ________ in an economy.

Answer 41

inflation

Question 42

Multiple Choice: Which of the following is not included in GDP? A) Consumption B) Investment C) Government spending D) Illegal activities

Answer 42

D) Illegal activities

Question 43

What does the business cycle depict?

Answer 43

Fluctuations in economic activity over time.

Question 44

True or False: A recession is characterized by two consecutive quarters of negative GDP growth.

Answer 44

True

Question 45

What is meant by 'stagflation'?

Answer 45

A combination of stagnant economic growth and high inflation.