Free GED Social Studies Economics Practice Test

Question 1

What is the law of supply?

Accepted Answer

As price increases, the quantity supplied increases

Answer

The law of supply states that as the price of a good increases (all else equal), producers are willing to supply a greater quantity because higher prices mean higher profits.

Question 2

What is the law of demand?

Accepted Answer

As price increases, quantity demanded decreases

Answer

The law of demand states that as the price of a good increases (all else equal), consumers will demand a smaller quantity — an inverse relationship between price and quantity demanded.

Question 3

Which term describes the total value of all goods and services produced within a country in one year?

Accepted Answer

GDP (Gross Domestic Product)

Answer

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

Question 4

What is inflation?

Accepted Answer

A general increase in prices over time, reducing purchasing power

Answer

Inflation is the rate at which the general level of prices for goods and services rises over time, thereby reducing the purchasing power of money.

Question 5

In a market economy, prices are primarily determined by:

Accepted Answer

Supply and demand

Answer

In a market (capitalist) economy, prices are determined by the interaction of supply (from producers) and demand (from consumers).

GED Practice Test

GED Practice Test

Free GED Social Studies Economics Practice Test