Multiple Choice Questions - Basics of Economics

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Which one of the following is not one of the basic economic questions?

What to produce

How to produce

How to minimize economic growth (correct)

Who to produce for

The sacrifice involved when you choose a particular course of action is called the:

Opportunity cost (correct)

Alternative

Consumer cost

Producer cost

Human wants are:

Always increase over time

Always fixed

Can never decrease

Unlimited (correct)

The free market involves:

Market forces of supply and demand Signup and view all the answers

A mixed economy:

Allocates resources via market forces and government intervention Signup and view all the answers

Which of the following is NOT likely to be true in a command economy?

The amount of resources in the economy are unlimited Signup and view all the answers

Which of the following is an example of a macroeconomic issue?

The level of unemployment in the UK Signup and view all the answers

What is meant by an 'objective' in economics?

A target Signup and view all the answers

Which of the following is not part of fiscal policy?

Interest rates Signup and view all the answers

Which of the following does the government not control directly?

Firms' investment decisions Signup and view all the answers

Which of the following is not a macroeconomic issue?

The wages paid to footballers Signup and view all the answers

Which of the following can the government not use directly to control the economy?

Pay rates within the private sector Signup and view all the answers

Which of the following is a normative statement in economics?

The UK economy is growing fast relative to other European Union members Signup and view all the answers

If an economy is productively efficient, what does it imply?

More of one product can only be produced if less of another product is produced Signup and view all the answers

What determines the combination of products produced in a free market?

The government Signup and view all the answers

What is the opportunity cost of producing the 5th B if an economy moves from 10 units of A and 4 units of B to 7 As and 5 Bs?

3 As Signup and view all the answers

When an economy operates outside the Production Possibility Frontier (PPF), what does it indicate?

It is trading with other economies Signup and view all the answers

What may cause an outward shift of the production possibility frontier (PPF)?

Better training of employees Signup and view all the answers

What does Gross National Product equal?

Net National Product plus net property income from abroad Signup and view all the answers

Which of the following measures the standard of living?

Real GDP per capita Signup and view all the answers

What does Real national income measure?

Nominal national income adjusted for inflation Signup and view all the answers

Which type of economics is exemplified by the statement 'Reducing inflation is a more important objective than economic growth'?

Normative economics Signup and view all the answers

What does Net National Product equal?

Gross National Product minus depreciation Signup and view all the answers

Which aspect of the circular flow is considered true in economics?

It illustrates the flow of goods, services, and resources between businesses and households Signup and view all the answers

What does GDP measure?

A country's total income Signup and view all the answers

To adjust GDP from market prices to factor cost, you should:

Deduct indirect taxes and add subsidies Signup and view all the answers

To adjust from Net National Product (NNP) to Gross National Product (GNP), you should:

Add depreciation Signup and view all the answers

The Gini coefficient is a measure of:

Income inequality within a country Signup and view all the answers

A higher GDP per capita may not accurately reflect an improvement in quality of life because:

It does not account for the quality of goods and services produced Signup and view all the answers