Introduction to Economics: Master the Basics of Economic Principles

Question 1

In a pure market economy, which of these is a key feature?

Accepted Answer

Individuals and businesses make their own economic decisions

Answer

Government controls production and distribution

Answer

The government sets prices for goods and services

Answer

Competition is prohibited

Question 2

In economics, what is the term for the process of distributing limited resources among various desires?

Accepted Answer

Scarcity

Answer

Profit maximization

Answer

Fiscal policy

Answer

Monetary policy

Question 3

What is the best definition of economics?

Accepted Answer

The study of how people and societies use limited resources to meet their unlimited needs.

Answer

The study of how governments control the economy.

Answer

The study of how businesses make the most money.

Answer

The study of how money moves through a society.

Question 4

Which fundamental principle of economics is best illustrated by the idea that people make logical decisions based on their limited resources?

Accepted Answer

Individuals make rational choices based on limited resources.

Answer

The government should actively intervene in the economy to ensure equality.

Answer

Economic growth is the ultimate goal of any economic system.

Answer

The free market is always the most efficient way to allocate resources.

Question 5

Which concept is NOT a fundamental principle of economics?

Accepted Answer

Equity

Answer

Supply and Demand

Answer

Opportunity Cost

Answer

Scarcity

Question 6

Which of the following is NOT a core principle of Economics?

Accepted Answer

Biology and Economic Behavior

Answer

Scarcity and Resource Allocation

Answer

Demand and Supply Dynamics

Answer

Role of Government in Economic Systems

Question 7

What is the primary focus of the field of economics?

Accepted Answer

How individuals make choices when resources are limited.

Answer

How governments distribute resources.

Answer

How businesses increase their earnings.

Answer

How economies expand and change over time.

Question 8

Scarcity means that society and individuals have limited resources to satisfy their unlimited desires. Which of the following is a result of scarcity?

Accepted Answer

Trade-offs and opportunity costs

Answer

Efficient resource allocation

Answer

Unlimited production and consumption

Answer

Rational decision-making

Question 9

In economics, scarcity refers to the limited availability of resources. Which statement best describes this concept?

Accepted Answer

Resources are scarce, forcing choices about how to use them.

Answer

Resources are abundant, and our wants are limited.

Answer

Scarcity is a temporary condition that can be easily overcome.

Answer

Individuals have unlimited access to resources to meet their needs.

Question 10

Which fundamental economic concept focuses on the limited availability of resources compared to our desires?

Accepted Answer

Scarcity

Answer

Opportunity cost

Answer

Inflation

Answer

Economic systems

Question 11

In economics, scarcity refers to:

Accepted Answer

Limited resources compared to unlimited wants

Answer

A surplus of resources and a lack of wants

Answer

Unlimited wants and an equal distribution of resources

Answer

Unlimited resources and a lack of wants

Question 12

Which of the following is a characteristic of a command economy?

Accepted Answer

Central planning by the government

Answer

Private ownership of property

Answer

Prices determined by supply and demand

Answer

Consumer sovereignty

Question 13

What is the primary focus of the field of economics?

Accepted Answer

How individuals and societies make choices with limited resources

Answer

How goods and services are produced and distributed

Answer

The government's role in regulating the economy

Answer

International trade and finance

Question 14

In economics, scarcity refers to which of the following?

Accepted Answer

Individuals have endless desires but limited resources to fulfill them.

Answer

Resources are abundant and easily accessible.

Answer

Government policies lead to artificial shortages.

Answer

Technological advancements can eradicate scarcity.

Question 15

Which of the following is NOT a core principle of economics?

Accepted Answer

Inflation

Answer

Scarcity

Answer

Trade-offs

Question 16

In economics, what is the term for the value of the next best choice you give up when making a decision?

Accepted Answer

Opportunity cost

Answer

Scarcity

Answer

Comparative advantage

Answer

Marginal benefit

Question 17

In economics, what term describes the fundamental principle that resources are limited compared to human wants?

Accepted Answer

Scarcity

Answer

Opportunity Cost

Answer

Gross Domestic Product (GDP)

Question 18

In economics, scarcity refers to the:

Accepted Answer

Limited availability of resources compared to human wants

Answer

Abundance of resources compared to human wants

Answer

Inevitable shortage of goods and services

Answer

Government's inability to control economic outcomes

Question 19

Why do individuals and societies make choices, according to economic theory?

Accepted Answer

To meet unlimited wants with limited resources

Answer

To avoid risks and uncertainties

Answer

To maximize profits and minimize costs

Answer

To achieve social equality and justice

Question 20

In economics, which core concept highlights the limited availability of resources compared to unlimited human wants and needs?

Accepted Answer

Scarcity

Answer

Abundance

Answer

Equilibrium

Answer

Efficiency

Question 21

What is the most accurate definition of economics?

Accepted Answer

The study of how people, businesses, and governments make decisions when resources are limited.

Answer

The study of how to manage personal finances.

Answer

The study of how governments control the economy.

Answer

The study of how to increase economic output.

Question 22

What is a key characteristic that sets a capitalist economic system apart from other systems?

Accepted Answer

Private ownership of production resources

Answer

Government control of major industries

Answer

Equal distribution of wealth and income

Answer

Centralized planning and resource allocation

Question 23

What is the primary difference between microeconomics and macroeconomics?

Accepted Answer

Microeconomics studies individual households and firms, while macroeconomics examines the economy as a whole.

Answer

Microeconomics focuses on supply and demand, while macroeconomics focuses on government policies.

Answer

Microeconomics analyzes long-term trends, while macroeconomics analyzes short-term trends.

Question 24

In economics, what does the production possibilities frontier (PPF) represent?

Accepted Answer

A graph showing the highest possible production levels of two goods with limited resources and technology.

Answer

A list of the resources needed to produce two different goods.

Answer

A formula for dividing resources between two industries.

Answer

A government tool for controlling production in certain industries.

Question 25

What is a primary objective of macroeconomic policies in maintaining economic stability?

Accepted Answer

Addressing broad economic challenges to foster stability and growth

Answer

Solely concentrating on boosting economic growth

Answer

Mainly enforcing regulations on individual businesses

Question 26

Which economic principle states that society's resources are not enough to meet all its desires?

Accepted Answer

Scarcity

Answer

Abundance

Answer

Equilibrium

Question 27

In economics, the 'cost' of a decision refers to:

Accepted Answer

The value of the best alternative you gave up

Answer

The money spent on a product or service

Answer

The price difference between similar products

Answer

The cost of making one more unit of a product

Question 28

What is a key goal of macroeconomic policies implemented by governments?

Accepted Answer

Promoting sustained economic growth and development

Answer

Eliminating unemployment

Answer

Keeping inflation at zero percent

Question 29

What is the purpose of a production possibilities frontier (PPF)?

Accepted Answer

To show the maximum possible combinations of goods and services that can be produced with limited resources in a specific time period.

Answer

To identify the optimal choices for consumers and producers in an economy.

Answer

To explain the factors that determine the price of goods and services in the market.

Answer

To compare the potential economic growth rates of different countries.

Question 30

In economics, unemployment specifically refers to individuals who are:

Accepted Answer

Actively seeking work and available to start immediately

Answer

Not actively seeking work but would be willing to work if offered a job

Answer

Working part-time or fewer hours than desired

Answer

Retired from the workforce and no longer seeking employment

Question 31

In economics, which of these is a core concept?

Accepted Answer

Scarcity of resources

Answer

Law of Conservation of Energy

Answer

Theory of Relativity

Question 32

In economics, scarcity refers to:

Accepted Answer

The necessity of making choices due to limited resources.

Answer

The abundance of resources compared to human wants.

Answer

A condition that is only prevalent in underdeveloped countries.

Answer

A temporary situation that can be eliminated with technological advancements.

Question 33

Which measure indicates the percentage of the workforce actively searching for employment, available to work, and currently unemployed?

Accepted Answer

Official unemployment rate

Answer

Labor force participation rate

Answer

Employment-to-population ratio

Answer

Underemployment rate

Question 34

Economics acknowledges a fundamental issue that individuals and societies face. Which concept accurately describes this problem, where human desires are limitless while resources are finite?

Accepted Answer

Scarcity

Answer

Abundance

Answer

Inflation

Answer

Equilibrium

Question 35

Which of the following principles explains that individuals and societies must make choices about how to allocate their scarce resources among competing desires?

Accepted Answer

Scarcity

Answer

Law of Demand

Answer

Equilibrium

Question 36

What is the most accurate definition of economics?

Accepted Answer

The study of how people and societies make choices when resources are limited to meet their needs.

Answer

The study of how governments control businesses.

Answer

The study of how money moves through an economy.

Answer

The study of how to make the most money.

Question 37

What is a direct result of inflation?

Accepted Answer

Decreased currency value

Answer

Increased consumer purchasing power

Answer

Lower cost of living

Answer

Reduced unemployment

Question 38

Identify the key differences between **monetary policy** and **fiscal policy**. Specify the branch of government primarily responsible for implementing each policy.

Accepted Answer

Monetary policy, implemented by the central bank, involves regulating the money supply and interest rates. Fiscal policy, enacted by the legislative branch, involves government spending and taxation.

Answer

Both monetary policy and fiscal policy solely focus on controlling the money supply.

Answer

Monetary policy is the responsibility of the executive branch, while fiscal policy is implemented by the central bank.

Answer

Monetary policy and fiscal policy are interchangeable terms.

Question 39

Which of the following is **NOT** included in the calculation of Gross Domestic Product (GDP)?

Accepted Answer

Foreign aid

Answer

Personal consumption expenditures

Answer

Government spending

Answer

Net exports

Question 40

Which of the following best describes a mixed economic system?

Accepted Answer

A system that combines elements of both capitalism and socialism, with varying levels of government involvement.

Answer

A system where the private sector dominates, with limited government involvement.

Answer

A system where the government owns and controls all means of production.

Answer

A system with no government involvement in the economy.

Question 41

When demand for a product is highly elastic, what will most likely happen if the price increases slightly?

Accepted Answer

The quantity demanded will decrease significantly.

Answer

The quantity demanded will increase significantly.

Answer

The quantity demanded will stay about the same.

Question 42

Which of the following is a fundamental principle of economics?

Accepted Answer

Scarcity

Answer

Energy conservation

Answer

Human rights

Answer

Social equality

Question 43

What is the primary result of scarcity?

Accepted Answer

Competition for resources

Answer

Unlimited resources

Answer

Increased economic growth

Answer

Higher wages

Question 44

According to the law of demand, what happens as price decreases?

Accepted Answer

Demand increases

Answer

Demand decreases

Answer

Quantity supplied increases

Answer

Quantity supplied decreases

Question 45

Which economic system is characterized by private ownership of resources and limited government intervention?

Accepted Answer

Capitalism

Answer

Socialism

Answer

Communism

Answer

Traditional economy

Question 46

What is the primary objective of monetary policy?

Accepted Answer

Control inflation

Answer

Increase employment

Answer

Promote economic growth

Answer

Reduce interest rates

Question 47

Which indicator measures the overall price level of goods and services?

Accepted Answer

CPI

Answer

GDP

Answer

Unemployment rate

Answer

Stock market index

Question 48

When making a decision, the **real cost** of the chosen option includes:

Accepted Answer

The value of the best alternative that must be given up

Answer

Only the money spent

Answer

The time spent thinking about the decision

Question 49

Which of the following is NOT a factor that leads to scarcity?

Accepted Answer

Unlimited human desires

Answer

Limited availability of resources

Answer

Growing demand for goods and services

Answer

Inefficient use of resources

Question 50

Based on the law of supply, what happens to the quantity of a good or service supplied when its price increases?

Accepted Answer

Increases

Answer

Decreases

Answer

Remains unchanged

Answer

Fluctuates unpredictably

Question 51

What term refers to the theoretical point at which quantity supplied and quantity demanded are equal in a market?

Accepted Answer

Equilibrium price

Answer

Market price

Answer

Surplus

Answer

Shortage

Question 52

What is the primary difference between microeconomics and macroeconomics?

Accepted Answer

Microeconomics focuses on individual economic units like firms and households, while macroeconomics focuses on the economy as a whole.

Answer

Microeconomics deals with short-term economic phenomena, while macroeconomics deals with long-term trends.

Answer

There is no significant difference between microeconomics and macroeconomics.

Answer

Microeconomics analyzes government policies, while macroeconomics analyzes consumer behavior.

Question 53

Which of the following is an example of a positive externality, where one party benefits from an action of another party without paying?

Accepted Answer

Education

Answer

Air pollution from a factory

Answer

Traffic congestion

Answer

Crime

Question 54

Which type of tax is levied based on the monetary value of goods or services purchased by consumers?

Accepted Answer

Sales tax

Answer

Income tax

Answer

Property tax

Answer

Excise tax

Question 55

How can economic inequality harm a society and its economy?

Accepted Answer

It can lead to resentment and limit opportunities for people to improve their lives.

Answer

It can boost economic growth and create more jobs.

Answer

It can encourage innovation and new businesses.

Question 56

Why does the government intervene in a market economy?

Accepted Answer

To address market failures like externalities, monopolies, and public goods

Answer

To stimulate economic growth

Answer

To cut government spending

Answer

To abolish the free market

Question 57

According to the law of supply and demand, what happens when demand increases?

Accepted Answer

Price increases

Answer

Price decreases

Answer

Quantity supplied increases

Answer

Quantity demanded decreases

Question 58

What is the concept of scarcity in economics?

Accepted Answer

The finite availability of resources relative to unlimited wants

Answer

The government's control over the economy

Answer

The need for consumers to save money

Answer

The inability of businesses to produce enough goods and services

Question 59

When supply and demand are equal, what is the resulting price called?

Accepted Answer

Equilibrium price

Answer

Market price

Answer

Floor price

Answer

Ceiling price

Question 60

What is the primary objective of fiscal policy?

Accepted Answer

Influence the economy through government spending and taxation

Answer

Control inflation

Answer

Increase employment

Answer

Reduce government debt

Question 61

According to the law of demand, as the price of a good increases, the quantity demanded:

Accepted Answer

Decreases

Answer

Increases

Answer

Stays the same

Answer

Increases proportionally

Question 62

Which of the following can shift the supply curve to the right?

Accepted Answer

Advancements in technology

Answer

Increased demand

Answer

Natural disasters

Answer

Government regulations

Question 63

How does opportunity cost relate to scarcity?

Accepted Answer

It shows that choices have consequences

Answer

It determines the price of goods

Answer

It explains why resources are allocated efficiently

Answer

It measures the value of goods and services

Question 64

What is the effect of inflation on the value of money?

Accepted Answer

It decreases its purchasing power

Answer

It increases its purchasing power

Answer

It does not affect its purchasing power

Answer

It makes money more valuable