Unlocking Economic Insights: 15 Essential Questions and Answers for Your Financial Knowledge

What economic theory proposes that a government should minimize its intervention in the economy?

A

Mercantilism

B

Capitalism

C

Socialism

D

Keynesianism

Answer:

The correct option is B. Capitalism

Note
Capitalism advocates minimal government intervention in economic activities, promoting private ownership and free markets.

Which economic indicator measures the average change in prices for a basket of goods and services?

A

GDP

B

CPI

C

P/E ratio

D

ROI

Answer:

The correct option is B. CPI (Consumer Price Index)

Note
The CPI tracks inflation by measuring changes in the prices of everyday consumer goods and services.

In economics, what does "GDP" stand for?

A

Gross Domestic Product

B

General Demand Pricing

C

Government Distribution Process

D

Global Development Protocol

Answer:

The correct option is A. Gross Domestic Product

Note
GDP measures the total economic output of a country.

What is the term for the total value of all goods and services produced by a country in a specific time period?

A

Gross National Income

B

Net Exports Here

C

Gross Domestic Product

D

Consumer Price Index

Answer:

The correct option is C. Gross Domestic Product

Note
GDP is the sum of a nation's economic activities within its borders.

Which economic system is characterized by government ownership of key industries and resources?

A

Capitalism

B

Socialism

C

Communism

D

Market economy

Answer:

The correct option is B. Socialism

Note
Socialism advocates for public or state ownership of essential resources and industries.

What is the term for the percentage of the workforce that is unemployed and actively seeking employment?

A

Labor Force Participation Rate

B

Inflation Rate

C

Unemployment Rate

D

Interest Rate

Answer:

The correct option is C. Unemployment Rate

Note
The unemployment rate reflects the portion of the workforce without jobs.

In economics, what does "ROI" stand for?

A

Return on Investment

B

Rate of Inflation

C

Revenue Over Interest

D

Return on Income

Answer:

The correct option is A. Return on Investment

Note
ROI measures the profitability of an investment relative to its cost.

What is the primary function of the Federal Reserve in the United States?

A

Tax collection

B

Monetary policy

C

Foreign trade regulation

D

Social welfare programs

Answer:

The correct option is B. Monetary policy

Note
The Federal Reserve manages the nation's money supply and implements monetary policy to stabilize the economy.

Which economic concept refers to the total value of a country's exports minus the total value of its imports?

A

Balance of Trade

B

Budget Deficit

C

National Debt

D

Trade Surplus

Answer:

The correct option is A. Balance of Trade

Note
The balance of trade measures a country's trade surplus or deficit.

What is the term for the financial benefit gained from an investment over its initial cost?

A

Opportunity cost

B

Sunk cost

C

Profit

D

Dividend

Answer:

The correct option is C. Profit

Note
Profit represents the positive financial gain from an investment.

Which economic system relies on supply and demand to determine prices and allocation of resources?

A

Capitalism

B

Socialism

C

Communism

D

Mixed economy

Answer:

The correct option is A. Capitalism

Note
Capitalism uses market forces to set prices and allocate resources.

What is the economic term for a period of declining economic activity characterized by reduced production and increased unemployment?

A

Recession

B

Inflation

C

Boom

D

Depression

Answer:

The correct option is A. Recession

Note
A recession signifies a temporary economic downturn.

Which economic theory argues that government spending can stimulate economic growth during downturns?

A

Monetarism

B

Laissez-faire

C

Keynesianism

D

Mercantilism

Answer:

The correct option is C. Keynesianism

Note
Keynesianism suggests government intervention through spending to counter economic recessions.

In economics, what does "PPP" stand for?

A

Public-Private Partnership

B

O Purchasing Power Parity

C

Price-to-Earnings Ratio

D

Production Possibility Frontier

Answer:

The correct option is B. Purchasing Power Parity

Note
PPP measures exchange rates based on price levels in different countries.

What economic principle suggests that individuals and firms make decisions that maximize their own welfare?

A

Comparative advantage

B

Rational self-interest

C

Absolute advantage

D

Invisible hand

Answer:

The correct option is B. Rational self-interest

Note
Rational self-interest is a key concept in classical economics, suggesting that individuals act to maximize their own well-being.