DECA Economics Concepts 3

Question 1

What does GDP measure?

Accepted Answer

The total market value of all final goods and services produced in a country in a given year

Answer

GDP (Gross Domestic Product) measures the total market value of all final goods and services produced within a country's borders in a specific time period.

Question 2

Which of the following is an example of a positive externality?

Accepted Answer

A neighbor's well-maintained garden increasing your home's value

Answer

A positive externality is a benefit that spills over to third parties not involved in the transaction, such as a neighbor's garden improving nearby property values.

Question 3

A decrease in consumer income leads to an increase in demand for bus rides. Bus rides are best classified as:

Accepted Answer

An inferior good

Answer

An inferior good is one for which demand increases as consumer income decreases, since consumers substitute it for pricier alternatives.

Question 4

The concept of 'ceteris paribus' in economics means:

Accepted Answer

All other things being equal or held constant

Answer

'Ceteris paribus' is Latin for 'all other things being equal,' used to isolate the effect of one variable by holding all others constant.

Question 5

Which fiscal policy action would a government most likely take during a recession to stimulate the economy?

Accepted Answer

Lowering taxes and increasing government spending

Answer

Expansionary fiscal policy involves lowering taxes to increase disposable income and increasing government spending to boost aggregate demand during a recession.

(DECA) Distributive Education Clubs of America Practice Test

(DECA) Distributive Education Clubs of America Practice Test

DECA Economics Concepts 3