Economic Concepts Quiz

The value of the best forgone alternative when making a choice.

Increased saving can decrease overall economic activity.

The total value of all final goods and services produced in an economy.

GDP = Consumption (C) + Investment (I) + Government Spending (G) + Net Exports (NX).

Spending by households on goods and services.

Spending by businesses on capital goods.

Spending by the government on goods and services.

Exports minus imports.

Unemployment due to the time it takes to find a job.

Unemployment caused by a mismatch between worker skills and available jobs.

Unemployment caused by economic downturns.

GDP measured in current prices.

GDP adjusted for inflation.

A measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

The total cost of purchasing goods and services needed to maintain a certain standard of living.

A general increase in prices of goods and services.

The cost of borrowing money or the return on lending money.

Actions taken by governments to influence the economy, like taxes and spending.

The idea that an initial change in spending can have a larger impact on overall economic activity.

The total amount of money saved by households, businesses, and governments.

The forces that determine the interest rate for loans.

Factors like inflation, government policy, and economic growth influence the cost of borrowing.

A type of loan where the borrower promises to pay back the principal plus interest.

Shares of ownership in a company.

Money deposited into a bank account.

Inflation can erode the value of the money repaid on a loan, making it less valuable than when it was borrowed.

Tax changes can affect the cost of borrowing by influencing the supply and demand for loanable funds.

Government spending can stimulate economic growth by boosting demand.

Government purchases have a larger impact on GDP than the initial amount spent, due to subsequent rounds of spending.

Taxes reduce disposable income, leading to a decrease in spending and a smaller impact on GDP than the initial amount taxed.

Economic indicators like unemployment and inflation are often correlated with the level of real GDP.

Higher national savings can lead to lower interest rates, stimulating investment and economic growth.

Different types of loans have different interest rates depending on the risk and maturity of the loan.