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web.groovymark@gmail.com
- December 7, 2024
Question 41
What is meant by the term “free trade”?
a) Trade that involves no tariffs, quotas, or restrictions between countries
b) Trade that is regulated by the government
c) Trade that occurs within a single country
d) Trade that occurs only through barter
Answer: a) Trade that involves no tariffs, quotas, or restrictions between countries
Explanation: Free trade allows goods and services to be exchanged between countries without barriers like tariffs, quotas, or government-imposed restrictions, promoting global commerce.
Question 42
What is a public good?
a) A good that can be consumed by one individual only
b) A good that is non-excludable and non-rivalrous
c) A good that is produced by private firms
d) A good that is only consumed by the government
Answer: b) A good that is non-excludable and non-rivalrous
Explanation: Public goods, such as clean air or national defense, can be consumed by everyone without reducing their availability to others, and no one can be excluded from their benefits.
Question 43
What is the result of high tariffs on imported goods?
a) It lowers domestic prices
b) It makes imported goods more expensive and protects domestic industries
c) It increases international competition
d) It reduces government revenue
Answer: b) It makes imported goods more expensive and protects domestic industries
Explanation: High tariffs increase the price of imported goods, making them less competitive with domestic products and giving an advantage to local industries.
Question 44
What is a competitive market?
a) A market with only one seller
b) A market where many firms sell similar products and no single firm can influence the price
c) A market where the government controls prices
d) A market where firms set their own prices without competition
Answer: b) A market where many firms sell similar products and no single firm can influence the price
Explanation: A competitive market is characterized by many firms offering similar products, with none able to control prices, as prices are determined by supply and demand.
Question 45
What is the principle of diminishing marginal utility?
a) The idea that total utility increases with each additional unit consumed
b) The idea that the satisfaction gained from consuming additional units of a good decreases as more is consumed
c) The idea that the cost of production increases with each additional unit produced
d) The idea that consumers will always demand more of a good at lower prices
Answer: b) The idea that the satisfaction gained from consuming additional units of a good decreases as more is consumed
Explanation: The principle of diminishing marginal utility states that as a person consumes more of a good, the additional satisfaction from consuming each extra unit decreases.
Question 46
What is the purpose of trade unions?
a) To reduce wages
b) To promote competition between workers
c) To negotiate for better wages, working conditions, and benefits for employees
d) To eliminate government regulations
Answer: c) To negotiate for better wages, working conditions, and benefits for employees
Explanation: Trade unions represent the collective interests of workers and negotiate with employers for improved wages, working conditions, and benefits.
Question 47
What does a supply curve show?
a) The relationship between price and the quantity supplied of a good
b) The relationship between demand and consumer preferences
c) The total amount of goods sold in a market
d) The difference between fixed and variable costs
Answer: a) The relationship between price and the quantity supplied of a good
Explanation: A supply curve shows how much of a good producers are willing to supply at different price levels, typically upward sloping, indicating higher quantities at higher prices.
Question 48
What is the World Trade Organization (WTO)?
a) An organization that regulates tariffs and taxes within countries
b) A global organization that ensures trade flows smoothly, predictably, and freely
c) A government agency that sets domestic trade policies
d) A union of countries that agree to eliminate all taxes on trade
Answer: b) A global organization that ensures trade flows smoothly, predictably, and freely
Explanation: The WTO is an international organization that works to facilitate global trade by reducing trade barriers and resolving trade disputes among member countries.
Question 49
What is the purpose of government price controls?
a) To allow markets to determine prices
b) To set minimum or maximum prices for goods and services to prevent shortages or surpluses
c) To increase inflation
d) To eliminate competition between firms
Answer: b) To set minimum or maximum prices for goods and services to prevent shortages or surpluses
Explanation: Government price controls, such as price ceilings and price floors, are used to regulate prices in markets where supply and demand might lead to unfair outcomes.
Question 50
What is the impact of a decrease in aggregate demand?
a) It leads to higher prices
b) It results in lower levels of production and higher unemployment
c) It causes inflation to rise
d) It increases consumer spending
Answer: b) It results in lower levels of production and higher unemployment
Explanation: A decrease in aggregate demand reduces the overall demand for goods and services in the economy, leading to lower production levels and higher unemployment.
