10 Principles of Economics

What does the principle 'People face trade-offs' imply?

• All choices lead to the same outcome.

• Trade-offs only exist in financial decisions.

• Every decision involves giving up something.

• There are no costs associated with decisions.

What is meant by 'opportunity cost'?

• The cost of the next best alternative foregone.

• The cost associated with inflation.

• The total cost of a decision.

• The cost of resources used in production.

According to the principles, what do rational people do?

• They make decisions based on emotions.

• They think at the margin.

• They ignore incentives.

• They always choose the cheapest option.

What is a market economy?

• An economy that is centrally planned.

• An economy that does not allow trade.

• An economy that is controlled by the government.

• An economy that allocates resources through decentralized decisions.

What does the principle 'Society faces a short-run tradeoff between inflation and unemployment' suggest?

• Increasing money supply always leads to lower prices.

• Higher inflation leads to higher unemployment.

• Inflation and unemployment are unrelated.

• Lower unemployment can lead to higher inflation.

Who is father of Economics?

• Adam smith

• Alfred marshal