BGS, BSGS Bachelor of General Studies Economics and Business 1 — Questions and Answers
Question 1: What term describes the total market value of all goods and services produced in a country in one year?
- Gross Domestic Product (Correct answer)
- Consumer Price Index
- National Debt
- Trade Balance
Correct answer: Gross Domestic Product
Gross Domestic Product (GDP) measures a nation's total economic output within its borders over a given period.
Question 2: Which economic principle states that as more units of a good are consumed, the additional satisfaction from each unit decreases?
- Law of Supply
- Law of Diminishing Marginal Utility (Correct answer)
- Comparative Advantage
- Economies of Scale
Correct answer: Law of Diminishing Marginal Utility
The Law of Diminishing Marginal Utility holds that each additional unit consumed adds less satisfaction than the previous one.
Question 3: What type of market structure is characterized by one seller controlling the entire supply of a product?
- Oligopoly
- Perfect Competition
- Monopoly (Correct answer)
- Monopsony
Correct answer: Monopoly
A monopoly exists when a single firm is the sole producer of a good with no close substitutes.
Question 4: In the US, which federal agency is primarily responsible for conducting monetary policy?
- Department of the Treasury
- Securities and Exchange Commission
- Federal Reserve (Correct answer)
- Office of Management and Budget
Correct answer: Federal Reserve
The Federal Reserve (the Fed) sets US monetary policy by controlling interest rates and the money supply.
Question 5: What does the term 'inflation' refer to in economics?
- A decrease in the money supply
- A general rise in the price level over time (Correct answer)
- An increase in unemployment
- A reduction in government spending
Correct answer: A general rise in the price level over time
Inflation is the sustained increase in the general price level of goods and services, reducing purchasing power.
Question 6: Which business document summarizes a company's revenues, expenses, and profit over a specific period?
- Balance Sheet
- Cash Flow Statement
- Income Statement (Correct answer)
- Accounts Receivable Ledger
Correct answer: Income Statement
The income statement (profit and loss statement) shows a business's financial performance over a reporting period.
BGS, BSGS Bachelor of General Studies Economics and Business 1
What term describes the total market value of all goods and services produced in a country in one year?