100 Short Questions from the Introduction to Economics Syllabus (with Answers)

Basic Economic Concepts

1. Define economics.
○ Economics is the study of how people, businesses, and governments make choices
to allocate scarce resources.
2. What are the three basic economic problems?
○ What to produce, how to produce, and for whom to produce.
3. Explain the role of government in an economy.
○ The government plays a role in providing public goods, regulating markets, and
redistributing income.
4. What is the difference between microeconomics and macroeconomics?
○ Microeconomics studies the behavior of individuals and firms, while
macroeconomics studies the economy as a whole.
5. What are the factors of production?
○ Land, labor, capital, and entrepreneurship.
Microeconomics
1. Define consumer behavior.
○ Consumer behavior is how people make choices about what to buy.
2. What are the determinants of demand?
○ Income, prices of related goods, tastes, expectations, and population.
3. What is the law of demand?
○ As the price of a good increases, the quantity demanded decreases, and vice
versa.
4. What are the determinants of supply?
○ Technology, input prices, expectations, and number of firms.
5. What is the law of supply?
● As the price of a good increases, the quantity supplied increases, and vice versa.
1. How is equilibrium price determined?
● Equilibrium price is where the quantity demanded equals the quantity supplied.
1. What is elasticity of demand?
● Elasticity of demand measures how responsive quantity demanded is to a change in
price.
1. What is elasticity of supply?
● Elasticity of supply measures how responsive quantity supplied is to a change in price.
1. What are the different types of market structures?
● Perfect competition, monopoly, oligopoly, and monopolistic competition.
1. Explain perfect competition.
● Many small firms selling identical products.
1. Explain monopoly.
● One firm with complete control over the market.
1. Explain oligopoly.
● A few large firms dominating the market.
1. Explain monopolistic competition.
● Many firms selling similar but not identical products.
1. What is the difference between average total cost and marginal cost?
● Average total cost is the total cost divided by the quantity produced, while marginal cost is
the cost of producing one additional unit.
1. What is the relationship between marginal cost and marginal revenue in a perfectly
 competitive market?
● In a perfectly competitive market, a firm maximizes profit by producing where marginal
cost equals marginal revenue.
Macroeconomics
1. Define national income.
● National income is the total income earned by a country's residents.
1. What is GDP?
● Gross Domestic Product is the total market value of goods and services produced within a
country.
1. What is GNP?
● Gross National Product is the total income earned by a country's residents, regardless of
where it was produced.
1. What is the difference between GDP and GNP?
● GDP measures production within a country, while GNP measures income earned by
residents.
1. What are the components of GDP?
● Consumption, investment, government spending, and net exports.
1. What is the business cycle?
● The ups and downs of economic activity over time.
1. What are the phases of the business cycle?
● Expansion, peak, recession, and trough.
1. What is inflation?
● A general increase in the price level.
1. What are the causes of inflation?
● Demand-pull inflation and cost-push inflation.
1. What is unemployment?
● People who are actively seeking work but cannot find a job.
1. What are the types of unemployment?
● Cyclical, structural, frictional, and seasonal.
1. What is fiscal policy?
● Government policies related to spending and taxation.
1. What are the tools of fiscal policy?
● Expansionary fiscal policy (increased spending or decreased taxes) and contractionary
fiscal policy (decreased spending or increased taxes).
1. What is monetary policy?
● Central bank policies related to the money supply and interest rates.
1. What are the tools of monetary policy?
● Open market operations, discount rate, and reserve requirements.
1. What is international trade?
● The exchange of goods and services between countries.
1. What are the benefits of international trade?
● Increased efficiency, lower prices, and greater variety of goods.
1. What are the costs of international trade?
● Job losses in some industries and increased competition.
1. What is a balance of payments?
● A record of a country's transactions with other countries.
1. What is exchange rate?
● The value of one country's currency relative to another.
Money, Finance, and the Open Economy
1. What is money?
● Anything widely accepted as a medium of exchange.
1. What are the functions of money?
● Medium of exchange, unit of account, store of value, and standard of deferred payment.
1. What is the money supply?
● The total amount of currency in circulation and bank deposits.
1. What is the role of the central bank?
● To control the money supply and regulate banks.
1. What is interest rate?
● The cost of borrowing money.
1. What is inflation?
● A general increase in the price level.
1. What are the effects of inflation?
● Reduced purchasing power, uncertainty, and economic instability.
1. What is unemployment?
● People who are actively seeking work but cannot find a job.
1. What are the effects of unemployment?
● Lost income, reduced economic activity, and social problems.
1. What is fiscal policy?
● Government policies related to spending and taxation.
1. What are the tools of fiscal policy?
● Expansionary fiscal policy (increased spending or decreased taxes) and contractionary
fiscal policy (decreased spending or increased taxes).
1. What is monetary policy?
● Central bank policies related to the money supply and interest rates.
1. What are the tools of monetary policy?
● Open market operations, discount rate, and reserve requirements.
1. What is international trade?
● The exchange of goods and services between countries.
1. What are the benefits of international trade?
● Increased efficiency, lower prices, and greater variety of goods.
1. What are the costs of international trade?
● Job losses in some industries and increased competition.
1. What is a balance of payments?
● A record of a country's transactions with other countries.
1. What is exchange rate?
● The value of one country's currency relative to another.
1. What is globalization?
● The increasing interconnectedness of the world's economies.
1. What are the effects of globalization?
● Increased trade, investment, and cultural exchange, but also job losses and income
inequality.
Additional Questions
1. What is the difference between positive and normative economics?
● Positive economics deals with what is, while normative economics deals with what should
be.
1. What is the concept of opportunity cost?
 ● The value of the next best alternative given up when a choice is made.
1. What is the law of diminishing returns?
● As more and more of a variable input is added to a fixed input, the marginal product
eventually declines.
1. What is a production possibility frontier?
● A graph that shows the maximum combinations of two goods an economy can produce
with its available resources and technology.
1. What is the concept of externalities?
● The unintended consequences of economic activity that affect people not directly involved
in the activity.
1. What is the role of government in addressing market failures?
● The government can intervene to correct market failures, such as monopolies and
externalities.
1. What is the concept of economic growth?
● An increase in the production of goods and services over time.
1. What is the role of technology in economic development?
● Technology can increase productivity and drive economic growth.
1. What is the concept of sustainable development?
● Economic development that meets the needs of the present without compromising the
ability of future generations to meet their own needs.
1. What are the challenges faced by developing economies?
○ Poverty, inequality

Additional Questions (continued)

1. What is the role of international organizations in promoting economic
development?
● International organizations like the World Bank and the International Monetary Fund
provide financial assistance, technical expertise, and policy advice to developing
countries.
1. What is the concept of income inequality?
● Income inequality refers to the unequal distribution of income within a population.
1. What are the causes of income inequality?
● Education, skills, job opportunities, and government policies.
1. What are the consequences of income inequality?
● Social unrest, political instability, and reduced economic growth.
1. What are the policies to address income inequality?
● Progressive taxation, social safety nets, and investments in education and job training.
1. What is the concept of poverty?
● Poverty is a state of deprivation that prevents people from meeting their basic needs for
food, shelter, and healthcare.
1. What are the causes of poverty?
● Lack of education, limited job opportunities, and inequality.
1. What are the consequences of poverty?
● Poor health, malnutrition, and social exclusion.
1. What are the policies to address poverty?
● Poverty reduction programs, social safety nets, and economic growth.
1. What is the concept of economic development?
● Economic development is the process of improving the quality of life of people through
 economic growth and structural change.
1. What are the indicators of economic development?
● GDP per capita, life expectancy, education levels, and health indicators.
1. What are the challenges faced by developing economies?
● Poverty, inequality, political instability, and lack of infrastructure.
1. What is the role of international organizations in promoting economic
development?
● International organizations like the World Bank and the International Monetary Fund
provide financial assistance, technical expertise, and policy advice to developing
countries.
1. What is the concept of sustainable development?
● Sustainable development is economic development that meets the needs of the present
without compromising the ability of future generations to meet their own needs.
1. What are the challenges faced by sustainable development?
● Climate change, resource depletion, and environmental degradation.
1. What are the policies to promote sustainable development?
● Renewable energy, energy efficiency, and environmental protection.
1. What is the concept of economic globalization?
● Economic globalization is the increasing integration of national economies through trade,
investment, and financial flows.
1. What are the benefits of economic globalization?
● Increased trade, investment, and economic growth.
1. What are the costs of economic globalization?
● Job losses, income inequality, and cultural homogenization.
1. What is the role of international institutions in regulating economic globalization?
● International institutions like the World Trade Organization and the International Monetary
Fund play a role in regulating international trade and finance.
1. What is the concept of economic integration?
● Economic integration is the process of reducing barriers to trade and investment among
countries.
1. What are the different forms of economic integration?
● Free trade area, customs union, common market, and economic union.
1. What are the benefits of economic integration?
● Increased trade, investment, and economic growth.
1. What are the challenges faced by economic integration?
● Differences in economic policies, cultural differences, and political tensions.
1. What is the concept of economic development?
● Economic development is the process of improving the quality of life of people through
economic growth and structural change.
1. What are the indicators of economic development?
● GDP per capita, life expectancy, education levels, and health indicators.
1. What are the challenges faced by developing economies?
● Poverty, inequality, political instability, and lack of infrastructure.
1. What is the role of international organizations in promoting economic
development?
● International organizations like the World Bank and the International Monetary Fund
provide financial assistance, technical expertise, and policy advice to developing
countries.
1. What is the concept of sustainable development?
● Sustainable development is economic development that meets the needs of the present
without compromising the ability of future generations to meet their own needs.
1. What are the challenges faced by sustainable development?
● Climate change, resource depletion, and environmental degradation.
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● https://en.wikipedia.org/wiki/Sustainability