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Milton Friedman and the Monetarist school argue that inflation is primarily caused by:
AExcessive growth in money supply relative to economic output
BHigh trade deficits
CRising wage demands from labor unions
DExcessive government budget deficits
The crowding-out effect refers to a scenario where increased government spending leads to:
AHigher private investment due to economic growth
BHigher interest rates that reduce private investment expenditure
CLower tax revenues for the central treasury
DImmediate currency appreciation
The net market value of all final goods and services produced by nationals of a country, regardless of location, is:
AGross National Product (GNP)
BGross Domestic Product (GDP)
CNet Domestic Product (NDP)
DPersonal Income
Gross Domestic Product (GDP) measured at current market prices without adjusting for inflation is known as:
ANominal GDP
BPotential GDP
CNet Domestic Product
DReal GDP
The GDP Deflator is calculated as:
A(Nominal GDP / Real GDP) × 100
B(Real GDP / Nominal GDP) × 100
C(CPI / Nominal GDP) × 100
D(GDP growth rate / Inflation) × 100
If two goods are complements, an increase in the price of one good will lead to:
AA decrease in demand for the other good
BAn increase in demand for the other good
CNo change in demand for either good
DAn increase in quantity supplied of both goods
What does price elasticity of demand measure?
AThe responsiveness of quantity demanded to a change in price
BThe total revenue earned by firms at equilibrium
CThe shift of the demand curve due to income changes
DThe effect of supply shifts on market price
When total utility is at its maximum, marginal utility is equal to:
AInfinity
BZero
CNegative one
DOne
An indifference curve represents all combinations of two goods that yield the consumer:
AMaximum profit
BEqual utility or satisfaction
CEqual total expenditure
DMinimum marginal cost
In a perfectly competitive market in the long run, firms earn:
ASupernormal profits
BAbnormal profits
CZero economic profit (normal profit)
DNegative accounting profit