BEC Economics and Business Cycles 2

Question 1

Which market structure is characterized by a single seller with no close substitutes for its product?

Accepted Answer

Monopoly

Answer

Oligopoly

Answer

Monopolistic competition

Answer

Perfect competition

Question 2

The law of diminishing marginal returns states that:

Accepted Answer

Adding more of one input while holding others fixed eventually yields smaller incremental output

Answer

Total output always decreases when more workers are added

Answer

Long-run average costs always increase with output

Answer

Fixed costs decline as production increases

Question 3

A trade deficit occurs when a country's:

Accepted Answer

Imports exceed its exports

Answer

Exports exceed its imports

Answer

Government spending exceeds tax revenues

Answer

National debt exceeds its GDP

Question 4

Which of the following best describes stagflation?

Accepted Answer

High inflation combined with high unemployment and slow economic growth

Answer

Rapid economic growth with low unemployment

Answer

Deflation combined with high economic output

Answer

Low inflation with high GDP growth

Question 5

The multiplier effect in economics refers to:

Accepted Answer

The magnified impact on total income from an initial change in spending

Answer

The compounding interest earned on savings deposits

Answer

The increased tax revenue from higher economic output

Answer

The effect of money supply changes on interest rates

Question 6

Which phase of the business cycle immediately follows a peak?

Accepted Answer

Contraction (recession)

Answer

Trough

Answer

Expansion

Answer

Recovery