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web.groovymark@gmail.com
- December 7, 2024
Question 41
What is demand-pull inflation?
a) Inflation caused by an increase in aggregate demand
b) Inflation caused by rising production costs
c) Inflation caused by government intervention in the market
d) Inflation caused by decreasing demand
Answer: a) Inflation caused by an increase in aggregate demand
Explanation: Demand-pull inflation occurs when overall demand for goods and services exceeds supply, leading to higher prices.
Question 42
What is cost-push inflation?
a) Inflation caused by rising aggregate demand
b) Inflation caused by increasing production costs, such as wages or raw materials
c) Inflation caused by decreased competition in the market
d) Inflation caused by technological advancements
Answer: b) Inflation caused by increasing production costs, such as wages or raw materials
Explanation: Cost-push inflation arises when the costs of production increase, leading firms to raise prices to maintain profit margins.
Question 43
What is a progressive tax?
a) A tax that decreases as income increases
b) A tax that remains the same regardless of income
c) A tax that increases as income increases
d) A tax that is applied only to luxury goods
Answer: c) A tax that increases as income increases
Explanation: A progressive tax system imposes higher tax rates on individuals or entities with higher incomes, with the intent of creating a more equitable distribution of wealth.
Question 44
What is the primary role of the World Trade Organization (WTO)?
a) To monitor and enforce international labor standards
b) To regulate currency exchange rates between nations
c) To promote free trade by reducing tariffs and other trade barriers
d) To provide financial aid to developing countries
Answer: c) To promote free trade by reducing tariffs and other trade barriers
Explanation: The WTO promotes global trade by encouraging countries to reduce tariffs and trade barriers, ensuring smooth and predictable international commerce.
Question 45
What is the difference between nominal and real GDP?
a) Nominal GDP is adjusted for inflation, while real GDP is not
b) Nominal GDP includes government spending, while real GDP does not
c) Nominal GDP is measured using current prices, while real GDP is adjusted for inflation
d) There is no difference between nominal and real GDP
Answer: c) Nominal GDP is measured using current prices, while real GDP is adjusted for inflation
Explanation: Nominal GDP reflects the total value of goods and services at current prices, while real GDP adjusts for inflation, providing a more accurate measure of economic growth.
Question 46
What is a subsidy?
a) A tax imposed on imported goods
b) A direct payment or financial support provided by the government to encourage production
c) A government-mandated price floor on agricultural products
d) A penalty imposed on businesses for polluting
Answer: b) A direct payment or financial support provided by the government to encourage production
Explanation: Subsidies are financial incentives provided by the government to encourage the production of certain goods or services, often used in agriculture or renewable energy.
Question 47
What is the “invisible hand” in economics?
a) The influence of government regulation on markets
b) The role of central banks in controlling inflation
c) The concept that self-interest in a free market leads to economic prosperity
d) The way technological advancements impact global trade
Answer: c) The concept that self-interest in a free market leads to economic prosperity
Explanation: The invisible hand, a term coined by Adam Smith, refers to the unintended social benefits of individual actions driven by self-interest in a competitive market.
Question 48
What is capital in economics?
a) The money used to pay for wages and salaries
b) The goods and resources used to produce other goods and services
c) The land on which production facilities are built
d) The total number of goods and services produced in an economy
Answer: b) The goods and resources used to produce other goods and services
Explanation: Capital refers to the tools, machinery, and infrastructure that are used in the production of goods and services, as opposed to labor or natural resources.
Question 49
What is a public good?
a) A good that is provided only to paying customers
b) A good that is non-excludable and non-rivalrous, meaning it can be used by anyone without reducing its availability to others
c) A good that is produced by private companies for profit
d) A good that is consumed by only a select group of people
Answer: b) A good that is non-excludable and non-rivalrous, meaning it can be used by anyone without reducing its availability to others
Explanation: Public goods, such as national defense or street lighting, are available to everyone and cannot be restricted based on payment or consumption.
Question 50
What is the purpose of a tariff?
a) To encourage imports from foreign countries
b) To generate revenue for the government and protect domestic industries from foreign competition
c) To reduce the cost of goods in the domestic market
d) To promote free trade between nations
Answer: b) To generate revenue for the government and protect domestic industries from foreign competition
Explanation: Tariffs are taxes imposed on imported goods, used to generate revenue and protect domestic industries from foreign competition by making imported goods more expensive.
