Economics Unit 1

What happens to the quantity demanded of a good when its price decreases, assuming all other factors remain constant?

• It increases.

• It decreases.

• It remains unchanged.

• It becomes zero.

Which of the following is an example of Fiscal Policy during a recession?

• A company deciding to lower its prices.

• A consumer choosing to buy more of a product.

• The government reducing income taxes to stimulate economic activity

• A producer increasing supply due to higher demand.

The Production Possibilities Curve (PPC) illustrates which of the following concepts?

• Unlimited resources.

• Opportunity cost.

• Fixed demand.

• Constant supply.

Which of the following is a tool of fiscal policy?

• Interest rates.

• Taxation.

• Exchange rates.

• Money supply.

What is the primary objective of monetary policy?

• To control inflation by managing interest rates.

• To increase government spending.

• To reduce taxes.

• To regulate international trade.

Scarcity in economics refers to:

• The abundance of resources.

• The limited nature of society's resources.

• The unlimited wants of consumers.

• The surplus of goods in the market.

Market equilibrium occurs when:

• Supply exceeds demand.

• Demand exceeds supply.

• Quantity supplied equals quantity demanded.

• Prices are constantly changing.

Which of the following would cause a shift to the right in the supply curve for a product?

• An increase in production costs.

• A technological advancement in production.

• A decrease in the number of suppliers.

• An increase in consumer income.

A shift to the left in the demand curve could be caused by:

• An increase in consumer income.

• A decrease in the price of a substitute good.

• An increase in the price of a complementary good.

• A decrease in production costs.

If the government sets a price floor above the equilibrium price, what is the likely outcome?

• A shortage.

• A surplus.

• No effect on the market.

• A decrease in supply.