Microeconomics Overview Quiz
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Questions and Answers

What is the primary focus of microeconomics?

  • The impact of decisions on supply and demand within specific markets. (correct)
  • The overall economic performance of a country.
  • The behaviors of international trade and finance.
  • The study of large-scale economic systems.

    • How does scarcity influence economic decision-making?

  • It eliminates the need for choices.
  • It guarantees that all needs can be met without choice.
  • It prompts individuals, businesses, and governments to make decisions about resource use. (correct)
  • It increases the availability of all resources.

    • Which of the following is an example of a renewable resource?

  • Coal
  • Oil
  • Copper
  • Wind (correct)

    • What defines non-renewable resources?

    <p>Resources that cannot be replenished within a human lifetime.</p> Signup and view all the answers

    What is meant by 'human resources' in economics?

    <p>Labor and skills provided by individuals.</p> Signup and view all the answers

    Which of the following statements about microeconomics is incorrect?

    <p>Microeconomics only studies large corporations.</p> Signup and view all the answers

    What role does economics play in everyday decision-making?

    <p>It provides tools to think critically about our options.</p> Signup and view all the answers

    Which type of labor is typically associated with specialized skills and training?

    <p>Skilled labor.</p> Signup and view all the answers

    What is the opportunity cost in decision-making?

    <p>The value of the next best alternative that is given up</p> Signup and view all the answers

    How does scarcity generally affect prices?

    <p>The price tends to rise due to competition for scarce resources</p> Signup and view all the answers

    Which of the following is NOT a type of resource mentioned?

    <p>Financial Resources</p> Signup and view all the answers

    What is the main role of scarcity in economics?

    <p>To compel careful decision-making about resource allocation</p> Signup and view all the answers

    What type of resources does 'capital' refer to in the factors of production?

    <p>Goods and tools used in production</p> Signup and view all the answers

    Which scenario best illustrates the concept of scarcity impacting marketing strategies?

    <p>A retailer advertising a 'limited-time' sale to stimulate purchases</p> Signup and view all the answers

    Which category of resources includes the ideas and risk-taking of entrepreneurs?

    <p>Entrepreneurial Resources</p> Signup and view all the answers

    In capitalist economies, who primarily controls the factors of production?

    <p>Business owners and investors</p> Signup and view all the answers

    What does the Phillips Curve suggest about the relationship between unemployment and inflation?

    <p>Lower unemployment leads to higher inflation.</p> Signup and view all the answers

    Which event in the 1970s challenged the stability of the Phillips Curve?

    <p>Stagflation</p> Signup and view all the answers

    What is one way governments might respond to high inflation?

    <p>Raise interest rates.</p> Signup and view all the answers

    What happens when there is too much supply in the market?

    <p>Prices drop, encouraging more consumers to buy.</p> Signup and view all the answers

    What defines economic equilibrium?

    <p>The balance where supply equals demand.</p> Signup and view all the answers

    What is the first phase of the business cycle?

    <p>Expansion</p> Signup and view all the answers

    In what situation does a recession officially begin?

    <p>When the economy shrinks for two consecutive quarters.</p> Signup and view all the answers

    Which of the following describes Nash equilibrium?

    <p>A situation in game theory where players adapt to others' strategies.</p> Signup and view all the answers

    Which of the following impacts daily life due to economic conditions?

    <p>High inflation reduces purchasing power.</p> Signup and view all the answers

    How might government policies impact market equilibrium?

    <p>They can create disequilibrium by altering supply or demand.</p> Signup and view all the answers

    During which phase of the business cycle are companies likely to hire more workers?

    <p>Expansion</p> Signup and view all the answers

    What typically happens in a market experiencing disequilibrium?

    <p>The market adjusts as supply and demand seek balance.</p> Signup and view all the answers

    What typically triggers a recession?

    <p>Economic shock</p> Signup and view all the answers

    In the context of the Irish Potato Famine, what was a negative aspect of equilibrium?

    <p>Prices rose to a level where people could not afford food.</p> Signup and view all the answers

    What characterizes a market structure with perfect competition?

    <p>Many buyers and sellers with identical products.</p> Signup and view all the answers

    What is the equilibrium price in a market?

    <p>The price point where the amount supplied equals the amount demanded.</p> Signup and view all the answers

    What was one of the primary reasons for establishing the Federal Reserve?

    <p>To stabilize the banking system</p> Signup and view all the answers

    Which of the following was NOT a challenge faced by the U.S. economy before the Federal Reserve was established?

    <p>Excessive government intervention</p> Signup and view all the answers

    How does the Federal Reserve help control inflation?

    <p>By managing the money supply</p> Signup and view all the answers

    Which entity oversees the Federal Reserve System?

    <p>The Board of Governors</p> Signup and view all the answers

    What was the main purpose of the Federal Reserve Act passed in 1913?

    <p>To establish a central bank for economic stabilization</p> Signup and view all the answers

    What role does the Federal Reserve play as a 'lender of last resort'?

    <p>It provides funds to struggling banks to prevent failures</p> Signup and view all the answers

    What are the 12 Regional Federal Reserve Banks responsible for?

    <p>Implementing Fed's policies in various regions</p> Signup and view all the answers

    Which of the following does the Federal Reserve NOT oversee?

    <p>Private equity companies</p> Signup and view all the answers

    What is a primary function of subsidies in trade policy?

    <p>To provide financial support to local businesses</p> Signup and view all the answers

    How do tariffs generally affect the prices of foreign goods?

    <p>They raise the prices of foreign goods for consumers</p> Signup and view all the answers

    Which statement best describes quotas in trade policy?

    <p>They limit the amount of a product that can be imported</p> Signup and view all the answers

    What is the impact of free trade agreements (FTAs) on tariffs?

    <p>FTAs eliminate tariffs between participating countries</p> Signup and view all the answers

    Which is a potential downside of implementing trade policies such as tariffs?

    <p>They can lead to higher prices for consumers</p> Signup and view all the answers

    How do exchange rates influence the prices of imported goods?

    <p>A lower exchange rate raises prices of imports</p> Signup and view all the answers

    What is a key benefit of using trade policies like quotas?

    <p>They encourage consumers to buy more domestic products</p> Signup and view all the answers

    What is one consequence of increased tariffs on agricultural products?

    <p>It may reduce the availability of imported agricultural goods</p> Signup and view all the answers

    Study Notes

    Economics Study Guide

    • This study guide provides information about economics
    • Students should record their answers on separate paper or printouts
    • Contact teacher for questions or review

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    Description

    Test your knowledge on the key concepts of microeconomics, including the effects of scarcity, the classification of resources, and the decision-making process in economics. This quiz covers fundamental principles that shape microeconomic theory and everyday economic choices.

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