BPP Economics 2

Question 1

What is the role of a central bank in the United States?

Accepted Answer

Manage monetary policy and banking system

Answer

The Federal Reserve (U.S. central bank) manages monetary policy, regulates banks, maintains financial stability, and controls money supply and interest rates.

Question 2

What is an example of a variable cost in a business?

Accepted Answer

Raw materials used in production

Answer

Variable costs change with the level of production; raw materials are a clear example because more production requires more materials.

Question 3

What does 'trade deficit' mean?

Accepted Answer

A country imports more than it exports

Answer

A trade deficit occurs when the value of a country's imports exceeds the value of its exports, meaning it buys more from other countries than it sells.

Question 4

What is opportunity cost?

Accepted Answer

The value of the next best alternative forgone

Answer

Opportunity cost is the value of the best alternative you give up when making a choice, representing the hidden cost of every decision.

Question 5

Which market structure has only one seller controlling the entire market?

Accepted Answer

Monopoly

Answer

A monopoly exists when a single seller dominates an entire market with no close substitutes, giving that seller significant control over price.

BPP - Bachelor’s Preparatory Programme Practice Test

BPP - Bachelor’s Preparatory Programme Practice Test

BPP Economics 2