Economics Quiz

Capital gains refer to profits from selling an investment for more than the:

• Current price

• Projected future value

• Initial purchase price

• Market average

The _______ regulates securities markets and protects investors.

• Federal Reserve

• Internal Revenue Service (IRS)

• Securities and Exchange Commission (SEC)

• Department of Labor

A market dominated by a single seller with significant control over price is called a:

• Perfect competition

• Monopoly

• Oligopoly

• Sole proprietorship

What type of business structure is owned and managed by one person?

• Corporation

• Limited liability company (LLC)

• Sole proprietorship

• Partnership

In a market economy, how are production and consumption decisions made?

• By a central planning authority

• Through government regulations

• Through voluntary exchange between buyers and sellers

• By businesses competing for profit

A participatory economy combines central planning with:

• Laissez-faire principles

• Democratic wealth distribution

• Unrestricted free markets

• Focus on profit maximization

Laissez-faire economics is associated with:

• Active government intervention

• Minimized government control (Adam Smith)

• A centrally planned economy

• Regulations to promote social welfare

The equilibrium point in a market represents:

• A shortage of goods

• A surplus of goods

• The price and quantity where supply and demand meet

• Government intervention to stabilize prices

When considering investments, what is the risk-return trade-off?

• Lower risk leads to higher potential returns

• Higher risk is typically accompanied by higher potential returns

• All investments offer guaranteed returns

• Risk has no impact on investment decisions

A budget deficit occurs when government:

• Has a surplus of revenue over spending

• Spends more than it collects in revenue

• Maintains a balanced budget

• Reduces taxes for businesses