Q 01/05

In a market economy, what primarily determines the price of goods and services?

A) Government price regulation

B) The cost of production alone

C) Interaction of supply and demand

D) Consumer preferences alone

Answer · why

C) Interaction of supply and demand

The interaction of supply and demand sets prices: when buyers want more than sellers offer, prices climb; when goods pile up unsold, they fall. No pla...

Q 02/05

Which of the following is a fundamental characteristic of a capitalist economic system?

A) Private ownership of production

B) Central planning of all output

C) Social welfare put before profit

D) State control of major industries

Answer · why

A) Private ownership of production

Capitalism is an economic system defined by private individuals or businesses owning and controlling the means of production, with the primary goal of...

Q 03/05

What does Gross Domestic Product (GDP) measure?

A) Total wealth held by a nation's citizens

B) A country's debt minus its assets

C) Market value of final goods and services produced

D) Performance of a country's stock market

Answer · why

C) Market value of final goods and services produced

Gross Domestic Product (GDP) is a monetary measure of the total market value of all the final goods and services produced within a country's borders d...

Q 04/05

In economics, what is the 'opportunity cost' of a decision?

A) The money spent on the chosen action

B) The time spent making the decision

C) The combined value of every alternative

D) The value of the best alternative forgone

Answer · why

D) The value of the best alternative forgone

The value of the best alternative forgone is the opportunity cost: the true price of a choice is the next-best thing you gave up to make it.

Q 05/05

John Maynard Keynes's 'The General Theory of Employment, Interest and Money' was published in which year?

A) 1929

B) 1936

C) 1919

D) 1945

Answer · why

B) 1936

The General Theory appeared in February 1936, in the shadow of the Great Depression; it denied that an economy automatically returns to full employmen...