Economics and Business Cycles Flashcards
6 cards from real BEC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Economics and Business Cycles flashcards as text
Which market structure is characterized by a single seller with no close substitutes for its product?
Answer: Monopoly
A monopoly consists of a single seller that controls the entire market for a product with no close substitutes, giving it significant pricing power.
The law of diminishing marginal returns states that:
Answer: Adding more of one input while holding others fixed eventually yields smaller incremental output
The law of diminishing marginal returns holds that beyond some point, adding more of a variable input to fixed inputs will yield progressively smaller additions to output.
A trade deficit occurs when a country's:
Answer: Imports exceed its exports
A trade deficit (negative balance of trade) occurs when a country imports more goods and services than it exports during a given period.
Which of the following best describes stagflation?
Answer: High inflation combined with high unemployment and slow economic growth
Stagflation is the unusual combination of stagnant economic growth, high unemployment, and high inflation occurring simultaneously, challenging standard policy responses.
The multiplier effect in economics refers to:
Answer: The magnified impact on total income from an initial change in spending
The multiplier effect describes how an initial change in spending (e.g., government expenditure) ripples through the economy to produce a larger total change in national income.
Which phase of the business cycle immediately follows a peak?
Answer: Contraction (recession)
Following a peak — the highest point of economic activity — the economy enters a contraction phase characterized by declining output, employment, and spending.