KSA ECONOMICS QUIZ #1

How does competition affect market price?

• Less competition results in lower prices because of reduced supply.
• Competition typically lowers prices, while less competition raises them.

How does the government assure competition in the market?

• The government assures competition by enforcing antitrust laws and regulating monopolies.
• The government promotes competition by providing subsidies to large corporations.

How may monopolies affect consumer cost?

• Monopolies reduce prices by offering better products.
• Monopolies typically increase consumer costs due to lack of competition.

How does demand typically affect consumer price?

• Higher demand usually leads to higher consumer prices.
• Higher demand usually leads to lower consumer prices.

How does decreased supply (scarcity) affect prices?

• Decreased supply leads to lower prices.
• Decreased supply leads to higher prices.

How does increased supply such as overproduction typically affect price?

• Increased supply typically lowers prices.
• Increased supply typically raises prices.

How are market prices for goods and services determined?

• Market prices are determined by the interaction of supply and demand.
• Market prices are set by government regulations and consumer protection laws.

How does the government typically respond to rapid inflation?

• The government raises interest rates and may reduce spending or increase taxes.
• The government lowers interest rates, increases spending, and lowers taxes.

How does raising taxes and lowering government spending combat inflation?

• Raising taxes and lowering government spending allows the government to redistribute wealth so consumers can afford commodities.

• Raising taxes and lowering government spending reduces the money in circulation and decreases demand.

How may the government try to create sustainable economic growth?

• The government can impose price controls to prevent rapid inflation or deflation of market prices.

• The government can invest in infrastructure to promote trade and provide subsidies for innovation.