Q: The unemployment rate is calculated as:

$$\frac{\text{Number of Unemployed}}{\text{Labor Force}} \times 100$$

Question 1

Which of the following best describes the concept of opportunity cost?

Accepted Answer

The value of the next best alternative forgone when a choice is made.

Question 2

Suppose a country can produce either 100 units of wheat or 200 units of corn using all its resources. If the country decides to produce 50 units of wheat, what is the opportunity cost in terms of corn?

Accepted Answer

100 units of corn

Question 3

The law of diminishing marginal utility states that:

Accepted Answer

Marginal utility decreases as more units are consumed.

Question 4

Which of the following best explains the diamond-water paradox?

Accepted Answer

Water is less scarce than diamonds, so its price is lower despite its greater utility.

Question 5

A production possibilities frontier (PPF) is bowed outward rather than a straight line because:

Accepted Answer

Resources are not perfectly adaptable to producing both goods.

Question 6

If Country A can produce more of both goods than Country B using the same resources, Country A has:

Accepted Answer

Absolute advantage in both goods.

Question 7

Which of the following is NOT counted in GDP?

Accepted Answer

The sale of used furniture.

Question 8

The Consumer Price Index (CPI) is used to:

Accepted Answer

Track changes in the price level of a fixed basket of goods and services.

Question 9

If the government imposes a price ceiling below the equilibrium price, what is the likely outcome?

Accepted Answer

A shortage of goods.

Question 10

Which of the following would cause the aggregate demand (AD) curve to shift to the right?

Accepted Answer

An increase in government spending.

Question 11

The unemployment rate is calculated as:

Accepted Answer

$$\frac{	ext{Number of Unemployed}}{	ext{Labor Force}} 	imes 100$$

Question 12

Which of the following is an example of structural unemployment?

Accepted Answer

A factory worker replaced by automation.

Question 13

If actual unemployment is higher than natural unemployment, what does this indicate about cyclical unemployment?

Accepted Answer

Cyclical unemployment is positive.

Question 14

Which of the following is a function of money?

Accepted Answer

A store of value.

Question 15

The Federal Reserve increases the money supply by:

Accepted Answer

Buying U.S. government bonds.

Question 16

Which of the following best describes the crowding out critique of Keynesian fiscal policy?

Accepted Answer

Government borrowing raises interest rates, reducing private investment.

Question 17

The Laffer curve illustrates the relationship between:

Accepted Answer

Tax rates and government revenue.

Question 18

Which of the following statements is positive rather than normative?

Accepted Answer

"Raising taxes will reduce consumer spending."

Question 19

If the price level increases, what happens to the purchasing power of money?

Accepted Answer

Purchasing power decreases.

Question 20

Which of the following would NOT shift the supply curve for cars?

Accepted Answer

A change in consumer preferences for electric vehicles.

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