Economics Vocabulary Quiz 2

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| By Jessicaleague
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Jessicaleague
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| Attempts: 186
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  • 1/20 Questions

    A business organization owned by two or more persons who agree on a specific division of responsibilities and profits. 

    • Entrepreneurship
    • Perfect competition
    • Partnership
    • Mutual fund
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About This Quiz

Choose the best term to match the definition. This is for practice only. Results are not graded. You may take this quiz as often as you wish.

Economics Quizzes & Trivia

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  • 2. 

    A market dominated by a single seller. 

    • Monopoly

    • Oligopoly

    • Partnership

    • Corporation

    Correct Answer
    A. Monopoly
    Explanation
    A monopoly is a market structure where there is only one seller who has complete control over the supply of a particular good or service. This means that the monopolist can set prices and production levels without any competition. In a monopoly, there are no close substitutes available for consumers, and entry into the market by other firms is restricted. As a result, the monopolist has the power to dictate terms and exploit the market to maximize their profits. This is in contrast to other market structures like oligopoly, partnership, or corporation, where there are multiple sellers and more competition.

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  • 3. 

    The nation's central banking system 

    • Federal Reserve System

    • FDIC

    • GDP

    • Central Monetary Agency

    Correct Answer
    A. Federal Reserve System
    Explanation
    The correct answer is the Federal Reserve System. The Federal Reserve System is the central banking system of the United States. It is responsible for conducting monetary policy, regulating and supervising banks, and providing financial services to the government and financial institutions. The Federal Reserve System plays a crucial role in maintaining stability and promoting economic growth in the country.

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  • 4. 

    A recession that is especially long and severe. 

    • Great recession

    • Depression

    • Communism

    • Stagflation

    Correct Answer
    A. Depression
    Explanation
    A depression refers to an extended period of economic decline characterized by a significant decrease in economic activity, high unemployment rates, and a decline in production and trade. It is a severe and prolonged recession that typically lasts for several years. The term "great recession" is often used to describe the global economic downturn that occurred in the late 2000s, which was characterized by a severe financial crisis and a prolonged period of economic decline. While stagflation refers to a combination of high inflation and high unemployment, and communism refers to a political ideology, neither of these options accurately describes a recession that is especially long and severe.

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  • 5. 

    A minimum price for a good or service. 

    • Equilibrium price

    • Price floor

    • Monetary policy

    • Default price

    Correct Answer
    A. Price floor
    Explanation
    A price floor is a minimum price set by the government for a good or service. It is designed to prevent the price from falling below a certain level, usually to protect producers or workers in the industry. When the market price is below the price floor, it has no effect. However, if the market price is above the price floor, it creates a surplus as the quantity supplied exceeds the quantity demanded at that price. Therefore, a price floor is the most appropriate term to describe a minimum price for a good or service.

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  • 6. 

    A situation in which the government spends more than it takes in. 

    • Inflation

    • Recession

    • Fiscal policy

    • Budget deficit

    Correct Answer
    A. Budget deficit
    Explanation
    A budget deficit refers to a situation in which the government spends more money than it collects in revenue. This can occur when government expenditures exceed tax revenues or other sources of income. A budget deficit can lead to increased borrowing, which can have long-term consequences for the economy. It is often seen as a sign of financial imbalance and can contribute to inflation or recession if not properly managed.

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  • 7. 

     A price index determined by measuring the price of a standard group of goods meant to represent the typical "market basket" of a typical urban consumer.

    • Gross Domestic Product (GDP)

    • Consumer Price Index (CPI)

    • Aggregate Demand

    • Market System

    Correct Answer
    A. Consumer Price Index (CPI)
    Explanation
    The correct answer is Consumer Price Index (CPI). The CPI is a price index that measures the average change in prices of a fixed market basket of goods and services purchased by urban consumers. It is used to track inflation and to compare the purchasing power of a currency over time. The CPI is calculated by taking the price of each item in the market basket and weighting it based on its importance in the average consumer's budget.

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  • 8. 

    A business owned and managed by a single individual. 

    • Entrepreneurship

    • Private corporation

    • Sole proprietorship

    • Producer

    Correct Answer
    A. Sole proprietorship
    Explanation
    A sole proprietorship is a business owned and managed by a single individual. In this type of business structure, the owner has complete control over all aspects of the business and is personally responsible for its debts and liabilities. This form of ownership is common among small businesses and is relatively easy to set up and dissolve. Therefore, the correct answer for this question is sole proprietorship.

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  • 9. 

    Goods used in place of each other. 

    • Substitute goods

    • Complementary goods

    • Accessory goods

    • Scarce goods

    Correct Answer
    A. Substitute goods
    Explanation
    Substitute goods are goods that can be used in place of each other. When the price of one substitute good increases, consumers tend to switch to the other substitute good, as it offers a similar function or utility. This indicates that the goods are interchangeable and can satisfy the same consumer needs or desires. Complementary goods, on the other hand, are goods that are consumed together, such as bread and butter. Accessory goods refer to items that complement or enhance the use of a main product. Scarce goods are goods that are limited in supply.

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  • 10. 

    A maximum price that can be legally charged for a good or service. 

    • Price ceiling

    • Efficiency

    • Equilibrium price

    • Elasticity

    Correct Answer
    A. Price ceiling
    Explanation
    A price ceiling refers to a maximum price that can be legally charged for a good or service. This means that the price cannot exceed this limit. Price ceilings are often implemented by governments to protect consumers and ensure affordability. They can be set below the equilibrium price, which may create a shortage in the market. Price ceilings can have both positive and negative effects, such as making goods more affordable for consumers but potentially reducing the incentive for producers to supply the goods.

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  • 11. 

    A period of macroeconomic expansion followed by a period of contraction. 

    • Cycical unemployment

    • Business cycle

    • Depression

    • Frictional recession

    Correct Answer
    A. Business cycle
    Explanation
    The term "business cycle" refers to the fluctuations in economic activity that occur over time. It involves a period of expansion, where the economy grows and unemployment decreases, followed by a period of contraction, where the economy shrinks and unemployment increases. This pattern of expansion and contraction is a normal part of the economic cycle and is known as the business cycle.

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  • 12. 

    The amount of goods available. 

    • Stock

    • Production possibilities

    • Aggregate supply

    • Supply

    Correct Answer
    A. Supply
    Explanation
    Supply refers to the amount of goods or services that are available in the market for purchase or consumption. It represents the quantity of a particular product or service that producers are willing and able to sell at a given price and time. It is an essential factor in determining the equilibrium price and quantity in a market.

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  • 13. 

    A market structure in which a large number of firms all produce the same product. 

    • Monopolistic competition

    • Perfect competition

    • Oligopoly

    • Professional organization

    Correct Answer
    A. Perfect competition
    Explanation
    Perfect competition is the correct answer because it is a market structure where there are many small firms producing identical products. In a perfect competition, there is easy entry and exit for firms, perfect information about prices and products, and no individual firm has control over the market price. This type of market structure promotes efficiency and ensures that no single firm has the power to influence prices or control the market.

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  • 14. 

    Rate the Federal Reserve charges for loans to commercial banks. 

    • Discount rate

    • Elasticity

    • Inflation rate

    • Equilibrium rate

    Correct Answer
    A. Discount rate
    Explanation
    The discount rate refers to the interest rate at which the Federal Reserve lends money to commercial banks. This rate is used to control the money supply and influence economic activity. By lowering the discount rate, the Federal Reserve encourages banks to borrow more money, which in turn stimulates economic growth. Conversely, raising the discount rate makes borrowing more expensive and can help to curb inflation. Therefore, the correct answer is discount rate.

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  • 15. 

    A market structure in which a few large firms dominate a market. 

    • Monopoly

    • Oligopoly

    • Monopolistic competition

    • Traditional system

    Correct Answer
    A. Oligopoly
    Explanation
    An oligopoly is a market structure where a small number of large firms dominate the market. These firms have significant market power and can influence prices and competition. In an oligopoly, barriers to entry are high, making it difficult for new firms to enter the market and compete. This leads to limited competition and allows the dominant firms to control the market. Therefore, oligopoly is the correct answer for the given description.

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  • 16. 

    Unemployment that rises during economic development and falls when the economy improves. 

    • Recessional unemployment

    • Cycical unemployment

    • Frictional unemployment

    • Structural unemployment

    Correct Answer
    A. Cycical unemployment
    Explanation
    Cyclical unemployment refers to the type of unemployment that occurs as a result of fluctuations in the business cycle. During periods of economic downturn or recession, there is a decrease in overall economic activity, leading to a decline in demand for goods and services. This, in turn, leads to a decrease in demand for labor, resulting in job losses and an increase in unemployment. Conversely, during periods of economic growth and expansion, there is an increase in demand for goods and services, leading to increased employment opportunities and a decrease in unemployment. Therefore, cyclical unemployment rises during economic development and falls when the economy improves.

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  • 17. 

    The use of government spending and revenue collection to influence the economy. 

    • Regressive tax

    • Monetary policy

    • Discount rate

    • Fiscal policy

    Correct Answer
    A. Fiscal policy
    Explanation
    Fiscal policy refers to the use of government spending and revenue collection to influence the economy. This includes decisions on taxation, government spending, and borrowing. By adjusting these factors, the government can stimulate economic growth, control inflation, and stabilize the economy. This makes fiscal policy an effective tool for managing the overall health of the economy.

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  • 18. 

    Unemployment that occurs when people take time to find a job. 

    • Aggregate unemployment

    • Cyclical unemployment

    • Frictional unemployment

    • Temporary unemployment

    Correct Answer
    A. Frictional unemployment
    Explanation
    Frictional unemployment refers to the temporary period of unemployment that occurs when individuals are in the process of transitioning between jobs or searching for new employment opportunities. It is a natural and unavoidable part of the labor market as people take time to find suitable jobs that match their skills and preferences. This type of unemployment is considered to be relatively short-term and is often seen as a sign of a healthy and dynamic labor market.

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  • 19. 

    The amount of goods and services in the economy. 

    • Aggregate demand

    • Aggregate supply

    • Factors of production

    • Open market operations

    Correct Answer
    A. Aggregate demand
    Explanation
    Aggregate demand refers to the total demand for goods and services in an economy at a given price level and time period. It represents the sum of consumption, investment, government spending, and net exports. It reflects the overall willingness and ability of individuals, businesses, and the government to spend on goods and services. Changes in aggregate demand can affect the overall level of economic activity, inflation, and employment. Therefore, the correct answer is aggregate demand as it directly relates to the amount of goods and services in the economy that are being demanded.

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  • 20. 

    The total amount of goods and services in the economy that are consumed. 

    • Aggregate demand

    • Aggregate supply

    • Gross Domestic Product (GDP)

    • Businiess cycle

    Correct Answer
    A. Aggregate supply
    Explanation
    Aggregate supply refers to the total amount of goods and services produced and supplied in the economy. It represents the total production of goods and services available for consumption. This includes all goods and services produced by businesses, government entities, and individuals within a specific time period. Aggregate supply is an important indicator of the overall health and performance of an economy. It is used to measure the Gross Domestic Product (GDP) and understand the level of economic activity and growth.

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  • Current Version
  • Mar 20, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Sep 26, 2011
    Quiz Created by
    Jessicaleague
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