Key Economic Terms Test Online (Basic Economic Indicators)

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Question 1

1. What is the concept of "opportunity cost" in economics?

Answer

The cost of purchasing a product

Answer

The value of the next best alternative foregone when making a decision

Answer

The tax paid on a product or service

Answer

The cost of production for a good

Question 2

2. What is "Foreign Direct Investment" (FDI)?

Answer

Investments made by a country in foreign assets

Answer

Trade between two foreign countries

Answer

Government loans to foreign companies

Answer

Investments made by foreign entities in a country’s economy

Question 3

3. What is meant by "Fiscal Policy" in economic terms?

Answer

Government policies related to money supply

Answer

Policies aimed at controlling international trade

Answer

Regulations on foreign investments

Answer

Government policies related to taxation and government spending

Question 4

4. What is the purpose of a "trade surplus"?

Answer

To reduce the level of imports in the economy

Answer

To reduce the total national debt

Answer

To have more exports than imports, improving a country's economy

Answer

To increase foreign debt

Question 5

5. What is "supply-side economics"?

Answer

A policy that aims to increase production by lowering taxes and reducing regulations on businesses

Answer

A policy that focuses on increasing aggregate demand in an economy

Answer

A policy focused on controlling inflation through price controls

Answer

A policy focused on boosting government spending

Question 6

6. What does "exchange rate" refer to in economics?

Answer

The cost of living in a country

Answer

The rate at which one country’s currency can be exchanged for another’s

Answer

The average income of a country’s citizens

Answer

The value of a country’s currency in terms of gold

Question 7

7. Which of the following is considered a key function of central banks?

Answer

Regulating income taxes

Answer

Monitoring agricultural output

Answer

Ensuring the stability of the financial system

Answer

Setting trade tariffs

Question 8

8. What is the role of the World Trade Organization (WTO) in global trade?

Answer

To impose tariffs on international trade

Answer

To facilitate the negotiation of trade agreements and resolve disputes

Answer

To regulate global financial markets

Answer

To set domestic tax rates for countries

Question 9

9. What is "Trade Balance" in economic terms?

Answer

The total market value of a country's goods

Answer

The amount of foreign direct investment

Answer

The difference between the value of exports and imports

Answer

The total value of imports and exports

Question 10

10. What is meant by the term "devaluation" of currency?

Answer

A policy of increasing tariffs on foreign goods

Answer

The conversion of currency into foreign bonds

Answer

A decrease in the value of a country’s currency relative to others

Answer

An increase in the value of a country’s currency

Question 11

11. What is the difference between fiscal deficit and budget deficit?

Answer

Fiscal deficit and budget deficit mean the same thing

Answer

Fiscal deficit refers to a country's overall debt

Answer

Budget deficit is a narrower concept that refers to the annual gap in government revenue and expenditure

Answer

Fiscal deficit is about government borrowing, while budget deficit refers to a trade imbalance

Question 12

12. What does "economic diversification" involve?

Answer

Limiting foreign investment in the economy

Answer

Focusing on increasing government spending

Answer

Expanding the economy into different sectors to reduce dependence on one sector

Answer

Specializing in one type of economic activity

Question 13

13. Which of the following is an indicator of "economic productivity"?

Answer

Tax revenue

Answer

Number of patents issued

Answer

Gross Domestic Product (GDP) per worker

Answer

Unemployment rate

Question 14

14. Which of the following is true about "economic growth"?

Answer

It refers to an increase in a country's national debt

Answer

It is measured by the total production of goods and services in a country

Answer

It is the reduction in the unemployment rate

Answer

It refers to the level of inflation in an economy

Question 15

15. What is the main purpose of taxation in an economy?

Answer

To control the population growth

Answer

To regulate the money supply

Answer

To promote international trade

Answer

To fund government expenditure

Question 16

16. What is the role of the Central Bank in an economy?

Answer

To set monetary policy and regulate the money supply

Answer

To control the stock market

Answer

To regulate trade agreements

Answer

To manage taxation

Question 17

17. Which of the following describes "unemployment rate"?

Answer

The percentage of people who are actively looking for work

Answer

The total number of jobs available in the economy

Answer

The percentage of employed people in the workforce

Answer

The number of workers in a specific sector

Question 18

18. Which of the following is the best example of a "consumer good"?

Answer

Tools used for manufacturing

Answer

Goods purchased by individuals for personal use

Answer

Machinery used to produce goods

Answer

Goods purchased by businesses for resale

Question 19

19. What does "economic diversification" refer to?

Answer

The control of foreign trade and imports

Answer

The reduction of government involvement in business activities

Answer

The concentration of economic activities in one sector

Answer

The expansion of a country’s economy into new and varied sectors

Question 20

20. What does "market equilibrium" mean in economic terms?

Answer

When the quantity of goods demanded equals the quantity supplied at a particular price

Answer

When the government controls the market prices

Answer

When there is a shortage of goods in the market

Answer

When demand exceeds supply

Question 21

21. What does "exchange rate" determine in international trade?

Answer

The price of a country's exports in foreign markets

Answer

The cost of importing goods from other countries

Answer

The rate at which one currency can be exchanged for another currency

Answer

The tax on international transactions

Question 22

22. What is the "current account balance" in a country’s economy?

Answer

The total value of stock market transactions

Answer

The total value of the country’s imports and exports of goods and services

Answer

The amount of money in a country’s central bank

Answer

The government’s yearly tax collection

Question 23

23. What does "National Debt" refer to in economic terms?

Answer

The total value of exports and imports

Answer

The total savings held by a country’s government

Answer

The amount of money borrowed by businesses

Answer

The total amount of money a country owes to external creditors

Question 24

24. What does "debt-to-GDP ratio" measure?

Answer

The total value of exports and imports

Answer

The government’s ability to repay its debt

Answer

The amount of tax evasion in the economy

Answer

The total amount of government revenue

Question 25

25. What does the term "budget surplus" mean?

Answer

When inflation is at a record low

Answer

When government expenditures exceed revenues

Answer

When the government collects more revenue than it spends

Answer

When a country’s currency appreciates

Question 26

26. Which of the following is a consequence of "high inflation"?

Answer

A decrease in the cost of living

Answer

Decrease in interest rates

Answer

Higher prices leading to a decrease in purchasing power

Answer

Increased purchasing power of consumers

Question 27

27. Which of the following best defines "public debt"?

Answer

The money borrowed by the government to cover its budget deficit

Answer

The amount of money a country owes to foreign creditors

Answer

The total amount of tax collected by the government

Answer

The revenue generated from the sale of state-owned assets

Question 28

28. What does "GDP per capita" measure?

Answer

The total production value of a country

Answer

The average income of citizens in a country

Answer

The total wealth of an individual

Answer

The amount of tax revenue collected per person

Question 29

29. What does the "budget deficit" indicate in an economy?

Answer

Government is spending more than its revenue

Answer

The tax rate is too high

Answer

Government has balanced its spending and revenue

Answer

Government has surplus funds for investment

Question 30

30. What does the term "economic recession" refer to?

Answer

A period of economic expansion with low unemployment

Answer

A sharp increase in inflation rates

Answer

A sustained period of economic decline in GDP

Answer

A temporary increase in government spending

Question 31

31. Which of the following is a common indicator of economic growth?

Answer

Unemployment rate

Answer

Gross Domestic Product (GDP)

Answer

Consumer price index (CPI)

Answer

National debt

Question 32

32. Which of the following is an example of a "leading economic indicator"?

Answer

Unemployment rate

Answer

Consumer confidence index

Answer

Inflation rate

Answer

Stock market performance

Question 33

33. What does "Deflation" mean in economic terms?

Answer

A decrease in the general price level of goods and services

Answer

A period of economic stagnation with high unemployment

Answer

A sudden increase in the general price level of goods and services

Answer

A reduction in the number of job opportunities

Question 34

34. What does "price elasticity of demand" measure?

Answer

The extent to which the price of a good affects the supply of that good

Answer

The sensitivity of consumers to price changes for a good

Answer

The amount of demand for a product based on income

Answer

The price level required to cover production costs

Question 35

35. Which of the following is an example of "fiscal policy"?

Answer

Central bank decisions regarding interest rates

Answer

A government program to reduce unemployment benefits

Answer

Rules to limit the amount of foreign investment

Answer

Changes in government spending and taxation to influence economic activity

Question 36

36. What does "trade liberalization" involve?

Answer

The reduction of government spending on international trade

Answer

The introduction of quotas on imports

Answer

The imposition of trade restrictions

Answer

The removal of trade barriers and tariffs to promote free trade

Question 37

37. What is meant by "public spending" in economics?

Answer

The government’s expenditure on goods and services to benefit society

Answer

The expenditure by businesses on advertising

Answer

The savings deposited by the public in banks

Answer

The amount of taxes collected from businesses

Question 38

38. What is the primary objective of a tax system in an economy?

Answer

To reduce inflation

Answer

To fund government activities

Answer

To provide income redistribution

Answer

To encourage savings

Question 39

39. Which of the following is an example of "inflationary gap"?

Answer

When a country has a trade deficit

Answer

When the currency appreciates in value against foreign currencies

Answer

When the demand for goods exceeds the supply, causing prices to rise

Answer

When unemployment rates increase due to economic recession

Question 40

40. Which of the following is considered a key economic indicator used to assess a country’s economic health?

Answer

Gross Domestic Product (GDP)

Answer

Tax collection rate

Answer

Population density

Question 41

41. Which of the following is typically used to measure the standard of living in a country?

Answer

Tax revenue

Answer

Gross Domestic Product (GDP) per capita

Answer

Government spending

Answer

Inflation rate

Question 42

42. Which of the following best defines "Monetary Policy"?

Answer

A policy used by the central bank to control money supply and interest rates

Answer

A government policy to regulate income tax rates

Answer

A policy to regulate foreign exchange reserves

Answer

A policy to control inflation through taxation

Question 43

43. Which of the following is a characteristic of a progressive tax system?

Answer

Tax rates are constant across income levels

Answer

Tax rates decrease as income increases

Answer

Higher earners pay a higher percentage of income in taxes

Answer

The same tax rate applies to all taxpayers

Question 44

44. What is "tax incidence"?

Answer

The distribution of the burden of a tax between buyers and sellers

Answer

The impact of tax evasion on government revenue

Answer

The amount of tax a government collects from individuals

Answer

The policy used to reduce income inequality

Question 45

45. Which of the following describes "balance of payments"?

Answer

The financial reserves held by the central bank

Answer

The difference between income and expenditure of a government

Answer

The comparison between the value of a country’s imports and exports

Answer

The total revenue collected by the government

Question 46

46. Which of the following is an example of a direct tax?

Answer

Income tax

Answer

Customs duty

Answer

Value-added tax (VAT)

Question 47

47. What does the "federal reserve" control in the United States economy?

Answer

The total amount of imports

Answer

The money supply and interest rates

Answer

The level of taxation

Answer

The amount of government spending

Question 48

48. What does the term "supply-side economics" refer to?

Answer

Tax policies targeted at consumer spending

Answer

Economic policies focused on increasing production and reducing taxes for businesses

Answer

Policies aimed at increasing government spending

Answer

Policies aimed at increasing demand for goods and services

Question 49

49. What is the term "liquidity" in financial markets?

Answer

The amount of taxes paid on financial assets

Answer

The process of issuing bonds to raise capital

Answer

The long-term profitability of a business

Answer

The ease with which an asset can be converted into cash

Question 50

50. What is "foreign exchange reserves"?

Answer

The amount of a country’s currency held in foreign accounts

Answer

The money held by foreign investors in domestic banks

Answer

The total wealth of a country in the form of assets

Answer

The stocks and bonds held by foreign governments

Question 51

51. What is "consumer price index" (CPI)?

Answer

A measure of the total output of a country

Answer

A measure of the average change in prices paid by consumers for goods and services

Answer

A measure of the level of exports in the economy

Answer

A measure of the total taxes collected by the government

Question 52

52. What does the term "supply-side economics" focus on?

Answer

Increasing government intervention in market forces

Answer

Reducing government spending to control inflation

Answer

Increasing public sector employment

Answer

Reducing taxes and regulations to encourage production and investment

Question 53

53. Which of the following is an example of an economic indicator that reflects the standard of living in a country?

Answer

The unemployment rate

Answer

Government debt

Answer

The inflation rate

Answer

Gross Domestic Product (GDP) per capita

Question 54

54. Which of the following best describes "monetary policy"?

Answer

Policies aimed at regulating the stock market

Answer

Central bank actions to manage the money supply and interest rates

Answer

Policies that affect the balance of payments

Answer

Government policies related to income tax and public spending

Question 55

55. Which of the following is an example of "public goods"?

Answer

Luxury goods

Answer

Private education services

Answer

Personal automobiles

Answer

National defense

Question 56

56. Which of the following is an example of a "lagging indicator" in economics?

Answer

Stock market trends

Answer

Interest rates

Answer

Gross Domestic Product (GDP) growth

Answer

Unemployment rate

Question 57

57. Which of the following is an example of a macroeconomic indicator?

Answer

Individual wages

Answer

Stock prices

Answer

National unemployment rate

Answer

Household income

Question 58

58. What does inflation measure in an economy?

Answer

The level of foreign investment

Answer

The rate at which the general level of prices for goods and services is rising

Answer

The level of unemployment

Answer

The total wealth of a country

Question 59

59. What does "Monetary Policy" involve?

Answer

Government regulations related to trade tariffs

Answer

The regulation of the money supply and interest rates

Answer

The implementation of government savings programs

Answer

Policies related to taxation and government expenditure

Question 60

60. What does the term "Recession" indicate in economic terms?

Answer

A phase where prices are continuously increasing

Answer

A period of significant decline in economic activity across the economy

Answer

A period of steady economic growth

Answer

A phase of high levels of public spending

Question 61

61. What is "capital flight" in economic terms?

Answer

The investment in domestic infrastructure

Answer

The movement of financial assets out of a country to avoid taxes or instability

Answer

The export of goods to foreign markets

Answer

The transfer of capital from one company to another

Question 62

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Total Questions:	61
Time Allowed:	30 Minutes
Total Marks:	61
How to Attempt Test:	Please choose the right Option in MCQ-type question.
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Key Economic Terms Test Online (Basic Economic Indicators)

Key Economic Terms Test Online (Basic Economic Indicators)

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Key Economic Terms Test Online (Basic Economic Indicators)

Key Economic Terms Test

Study Plan for Key Economic Terms Test Online (Basic Economic Indicators)

How to Use GoTest for Preparation:

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