Fiscal / Domestic / Foreign Policy

Which economic system relies on customs and traditions to answer the basic economic questions?

• Command

• Mixed

• Market

• Traditional

In a market economy, how are decisions about what to produce typically made?

• By consumers and producers through supply and demand

• By the government

• By cultural traditions

• By elected officials

How does scarcity affect government decision-making?

• Governments can always meet all needs and wants.

• Governments must prioritize resources to address competing demands.

• Scarcity does not influence government policies.

• It encourages government policies to be less efficient.

How do mixed economies differ from command economies?

• Mixed economies combine government control with market freedom.

• Mixed economies have no government involvement.

• Mixed economies only operate in socialist countries.

• Mixed economies are based entirely on traditional systems.

Which of the following measures changes in the cost of living over time?

• Gross Domestic Product (GDP)

• Consumer Price Index (CPI)

• Unemployment rate

• Business cycle

What does the GDP measure?

• The inflation rate

• The total value of goods and services produced in a country

• The cost of living

• The level of government debt

What is a period of declining economic activity called?

• Inflation

• Expansion

• Recession

• Peak

A high unemployment rate typically indicates:

• An economy in a period of expansion

• An economy struggling to create jobs

• An economy with rapid inflation

• A balanced economy

How does the business cycle reflect economic instability?

• It shows continuous growth without downturns.

• It alternates between periods of expansion and contraction.

• It only tracks inflation.

• It measures only GDP.

What is the primary goal of fiscal policy?

• To manage economic growth and stability

• To create international trade agreements

• To regulate financial institutions

• To oversee individual investments