Understanding Basic Economics

What is the definition of economics?

• Economics is the study of the allocation of scarce resources to meet unlimited wants.

• Economics is the analysis of historical events and their impact on society.

• Economics is the study of government policies and regulations.

• Economics focuses solely on the production of goods and services.

What are the two main branches of economics?

• Behavioral Economics and Development Economics

• Microeconomics and Macroeconomics

• Public Economics and Labor Economics

• International Economics and Environmental Economics

What is the difference between microeconomics and macroeconomics?

• Microeconomics focuses on government policies; macroeconomics focuses on individual behavior.

• Microeconomics analyzes historical data; macroeconomics predicts future trends.

• Microeconomics studies global markets; macroeconomics studies local businesses.

• Microeconomics studies individual economic units; macroeconomics studies the economy as a whole.

What does GDP stand for?

• General Domestic Product

• Global Domestic Product

• Gross Domestic Product

• Gross National Product

What is the law of supply and demand?

• The law of supply and demand is an economic principle that describes how prices are determined in a market.

• It is a law that mandates fixed prices for all goods.

• It states that supply always exceeds demand in a market.

• It describes how government regulations control market prices.

What is a market economy?

• A market economy is an economic system driven by supply and demand with minimal government intervention.

• A market economy is controlled entirely by the government.

• A market economy relies solely on barter and trade without currency.

• A market economy is characterized by fixed prices set by authorities.

What is inflation?

• Inflation is the increase in prices and fall in the purchasing value of money.

• Inflation refers to the total amount of money in circulation.

• Inflation is the government policy to control interest rates.

• Inflation is the decrease in prices and increase in the purchasing value of money.

What is a budget deficit?

• A budget deficit is when expenditures equal revenues.

• A budget deficit is when expenditures exceed revenues.

• A budget deficit is when total savings are higher than spending.

• A budget deficit is when revenues exceed expenditures.

What are goods and services?

• Goods are intangible items; services are tangible activities.

• Goods and services are the same thing.

• Goods are tangible items; services are intangible activities.

• Goods are always free; services are always paid.

What is the role of government in the economy?

• The government regulates markets, provides public goods, ensures stability, redistributes income, and addresses market failures.

• The government solely focuses on international trade agreements.

• The government has no influence on the economy.

• The government only collects taxes and spends money.