ምርጫ ጥያቀና መልስ

1. Microeconomics focuses on the study of:

Answer: b. Individual consumer behavior

Explanation: Microeconomics is the branch of economics that studies

the behavior of individuals and firms in making decisions regarding the

allocation of resources. It deals with individual markets and the

interactions between consumers and producers.

2. The law of demand states that, ceteris paribus:

Answer: a. As the price of a good increases, the quantity demanded

decreases

Explanation: The law of demand indicates an inverse relationship

between price and quantity demanded. When prices rise, consumers

are less likely to purchase the good, and when prices fall, they are more

likely to buy more.

3. Which of the following is an example of a positive economic

statement?

Answer: c. An increase in the minimum wage will lead to higher

unemployment

Explanation: Positive economic statements are objective and can be

tested or validated. This statement makes a claim about a cause-and-

effect relationship that can be analyzed using data.

4. The production possibilities frontier (PPF) illustrates:

Answer: b. The trade-off between two goods that can be produced

Explanation: The PPF shows the maximum feasible amounts of two

goods that can be produced with available resources and technology,

illustrating the concept of opportunity cost and trade-offs in

production.

5. In economics, scarcity refers to:

Answer: b. The limited availability of resources relative to wants and

desires

Explanation: Scarcity is a fundamental concept in economics that arises

because resources are limited while human wants are virtually

unlimited, leading to the need for choices and trade-offs.

6. In a perfectly competitive market, firms are price-takers, meaning

that:

Answer: b. They have to accept the market price determined by supply

and demand

Explanation: In perfect competition, individual firms do not have

enough market power to influence prices; they must accept the

prevailing market price.

7. The price elasticity of demand measures:

Answer: a. The responsiveness of quantity demanded to changes in

price
Explanation: Price elasticity of demand quantifies how much the

quantity demanded of a good responds to a change in its price,

indicating whether demand is elastic (responsive) or inelastic (not

responsive).

8. Which of the following is an example of an external cost?

Answer: c. Pollution emitted by a factory affecting nearby residents'

health

Explanation: An external cost is a cost incurred by a third party who did

not choose to incur that cost, such as pollution affecting those living

near a factory.

9. The consumer price index (CPI) is used to measure:

Answer: a. The rate of inflation in an economy

Explanation: CPI measures changes in the price level of a basket of

consumer goods and services over time, providing insight into inflation

rates.

10. A progressive income tax system means that:

Answer: b. Higher-income individuals pay a higher percentage of their

income in taxes

Explanation: A progressive tax system imposes higher tax rates on

higher income levels, meaning that those who earn more pay a larger

share of their income in taxes compared to those with lower incomes.

11. Which of the following is an example of a fiscal policy tool?

Answer: b. Increasing government spending to stimulate economic

growth

Explanation: Fiscal policy involves government spending and taxation

decisions made to influence economic activity; increasing government

spending is a direct tool used to stimulate growth.

12. The concept of comparative advantage suggests that countries

should specialize in producing goods or services in which they have:

Answer: c. The lowest opportunity cost

Explanation: Comparative advantage occurs when a country can

produce a good at a lower opportunity cost than another country,

allowing for more efficient production and trade benefits.

13. In the circular flow model of the economy, households are

responsible for:

Answer: c. Providing factors of production

Explanation: In the circular flow model, households provide labor, land,

and capital (factors of production) to firms, which in turn produce

goods and services that households consume.

14. Which of the following is a characteristic of a monopolistic

competition market structure?

Answer: d. Differentiated products and some degree of market power

Explanation: Monopolistic competition is characterized by many firms

selling similar but not identical products, allowing them to have some

degree of market power due to product differentiation.

15. The term "opportunity cost" refers to:

Answer: b. The monetary value of the next best alternative foregone

Explanation: Opportunity cost is the cost of forgoing the next best

alternative when making a decision. It represents what you give up to

pursue a particular option.

16. The Phillips curve illustrates a trade-off between:

Answer: a. Inflation and unemployment

Explanation: The Phillips curve shows an inverse relationship between

inflation and unemployment, suggesting that lower unemployment can

lead to higher inflation and vice versa.

17. The term "ceteris paribus" means:

Answer: a. All other factors held constant

Explanation: "Ceteris paribus" is a Latin phrase meaning "all other

things being equal." It is used in economics to isolate the effect of one

variable by holding other relevant factors constant.

18. Which of the following is an example of a positive externality?

Answer: c. Education increasing an individual's future earnings

Explanation: A positive externality occurs when a benefit spills over to

third parties. Education not only benefits the individual but can also

lead to broader societal benefits, such as higher productivity and

increased earnings.

19. The term "elasticity of supply" measures the:

Answer: b. Percentage change in quantity supplied given a one-unit

change in price
Explanation: Elasticity of supply measures how responsive the quantity

supplied of a good is to changes in its price, typically expressed as a

percentage change.

20. The concept of a budget deficit refers to:

Answer: a. The difference between total government spending and

total tax revenue in a given period

Explanation: A budget deficit occurs when a government's expenditures

exceed its revenues, leading to borrowing or increased debt.

21. Which of the following is an example of a demand-side fiscal policy

measure?

Answer: b. Decreasing taxes to stimulate consumer spending

Explanation: Demand-side fiscal policy aims to influence aggregate

demand through government spending and taxation. Reducing taxes

puts more money in consumers' hands, encouraging spending.

22. The concept of a "public good" refers to a good that is:

Answer: b. Non-excludable and non-rivalrous

Explanation: Public goods are characterized by being available for all to

use without exclusion (non-excludable) and one person's use does not

reduce availability for others (non-rivalrous), such as national defense

or public parks.

23. The term "marginal utility" refers to the:

Answer: b. Additional satisfaction derived from consuming one more

unit of a good or service

Explanation: Marginal utility measures the additional satisfaction or

benefit obtained from consuming one more unit of a good or service,

reflecting diminishing returns as consumption increases.

24. The concept of "perfect information" in game theory assumes that:

Answer: d. Players have complete knowledge of the strategies and

payoffs of other players

Explanation: In game theory, perfect information means that all players

know all relevant information regarding other players' actions,

strategies, and payoffs, which influences their decision-making.

25. Which of the following is a characteristic of a command economy?

Answer: c. Centralized planning and government control over resource

allocation

Explanation: A command economy is characterized by centralized

control where the government makes decisions about production and

allocation of resources, contrasting with market economies where

decisions are made through supply and demand.

26. The concept of "monetary policy" refers to the actions taken by:

Answer: b. The central bank to control the money supply and interest

rates

Explanation: Monetary policy involves actions taken by a nation's

central bank (e.g., the Federal Reserve in the U.S.) to regulate the
money supply and interest rates in order to achieve macroeconomic

objectives such as controlling inflation, consumption, growth, and

liquidity.

27. Which of the following is an example of an explicit cost?

Answer: c. The wages paid to hired labor in production

Explanation: Explicit costs are direct, out-of-pocket payments for

expenses like wages, rent, and materials. Wages paid to hired labor are

a clear example of explicit costs.

28. The term "price discrimination" refers to a strategy where a firm:

Answer: a. Charges different prices to different customers based on

their willingness to pay

Explanation: Price discrimination occurs when a firm charges different

prices for the same product or service based on customers' willingness

to pay, maximizing profits by capturing consumer surplus.

29. Which of the following is an example of an oligopoly market

structure?

Answer: b. The fast-food industry dominated by a few large chains

Explanation: An oligopoly is a market structure characterized by a small

number of firms that dominate the market. The fast-food industry, with

major players like McDonald's and Burger King, exemplifies this

structure.

30. The term "comparative statics" refers to the analysis of:

Answer: d. The impact of changes in exogenous factors on economic

equilibrium

Explanation: Comparative statics examines how changes in external

factors (exogenous variables) affect the equilibrium in an economic

model, analyzing shifts in supply and demand curves.

31. The concept of "moral hazard" refers to the tendency for:

Answer: a. Individuals to engage in riskier behavior when they are

insured

Explanation: Moral hazard occurs when individuals take on more risk

because they do not bear the full consequences of their actions, often

due to insurance coverage that protects them from losses.

32. Which of the following is an example of a regressive tax?

Answer: c. A tax rate that decreases as income increases

Explanation: A regressive tax takes a larger percentage of income from

low-income earners than from high-income earners, meaning that as

income increases, the tax rate effectively decreases.

33. The concept of "liquidity" refers to:

Answer: a. The ease with which an asset can be converted into cash

Explanation: Liquidity measures how quickly and easily an asset can be

converted into cash without significantly affecting its price. Cash itself is

considered the most liquid asset.

34. The term "capital accumulation" refers to the process of:

Answer: a. Increasing the quantity and quality of physical and human

capital in an economy

Explanation: Capital accumulation involves investing in physical

(machinery, buildings) and human capital (education, skills) to enhance

productivity and economic growth.

35. Which of the following is a characteristic of a perfectly elastic

demand curve?

Answer: b. A small change in price leads to a large change in quantity

demanded

Explanation: A perfectly elastic demand curve indicates that consumers

will only purchase at one price; any increase in price leads to zero

quantity demanded, while any decrease leads to an infinite quantity

demanded.

36. The concept of "capital flight" refers to:

Answer: c. The transfer of financial capital to offshore tax havens

Explanation: Capital flight occurs when individuals or businesses move

their financial assets out of a country to avoid instability or unfavorable

economic conditions, often to offshore tax havens.

37. The term "monetary aggregate" refers to:

Answer: c. The measure of money supply, such as M1 or M2

Explanation: Monetary aggregates are categories that measure the

total money supply in an economy, with M1 and M2 being common

classifications that include different forms of money.

38. Which of the following is an example of a supply-side fiscal policy

measure?

Answer: b. Cutting income taxes to stimulate investment and

productivity
Explanation: Supply-side fiscal policies focus on increasing production

and economic growth by incentivizing investment, often through tax

cuts.

39. The concept of "asymmetric information" refers to a situation

where:

Answer: c. Sellers have more information than buyers in a transaction

Explanation: Asymmetric information occurs when one party in a

transaction has more or better information than the other, often

leading to market failures.

40. Which of the following is an example of a leading economic

indicator?

Answer: c. The stock market index

Explanation: Leading economic indicators are statistics that precede

economic events, and stock market performance often predicts future

economic activity.
41. The term "capital stock" refers to:

Answer: b. The physical equipment, machinery, and infrastructure used

in production

Explanation: Capital stock includes the physical assets that are used in

the production process, such as machinery and buildings.

42. Which of the following is a characteristic of a market in perfect

competition?

Answer: d. Numerous small firms selling identical products

Explanation: Perfect competition is characterized by many small firms

selling homogeneous products with no market power.

43. The term "balance of payments" refers to:

Answer: b. The difference between total exports and total imports of

goods and services

Explanation: The balance of payments records all economic

transactions between residents of a country and the rest of the world,

including trade in goods and services.

44. Which of the following is an example of a long-run economic

growth determinant?

Answer: a. The level of government spending on education and

healthcare

Explanation: Long-run growth determinants include factors that affect

an economy's productive capacity over time, such as investment in

education and healthcare.

45. The concept of "perfect competition" assumes that:

Answer: b. There are no barriers to entry or exit in the market

Explanation: Perfect competition assumes free entry and exit for firms

in the market, ensuring that no single firm can influence prices.

46. The term "fiscal multiplier" refers to:

Answer: c. The impact of changes in government spending on overall

economic activity

Explanation: The fiscal multiplier measures how much economic activity

is generated from changes in government spending or taxation.

47. Which of the following is a tool of monetary policy?

Answer: c. Open market operations

Explanation: Open market operations involve the buying and selling of

government securities by a central bank to control the money supply

and influence interest rates.

48. The term "inflationary gap" refers to a situation where:

Answer: b. The aggregate demand exceeds the potential output,

leading to inflationary pressures

Explanation: An inflationary gap occurs when demand in an economy

outstrips its productive capacity, causing upward pressure on prices.

49. Which of the following is an example of a non-excludable good?

Answer: c. A public park open to all individuals without any entrance

fee

Explanation: A non-excludable good is one that individuals cannot be

effectively excluded from using, meaning it is available to everyone

without a fee. A public park fits this definition, as anyone can access it

without restriction.

50. The term "frictional unemployment" refers to:

Answer: c. Unemployment due to individuals voluntarily quitting their

jobs in search of better opportunities

Explanation: Frictional unemployment occurs when individuals are

temporarily unemployed while transitioning between jobs or entering

the workforce. It reflects the time taken for people to find a job that

better matches their skills or preferences.