General General Economics and Financial Literacy

Question 1

What is 'inflation' in economics?

Accepted Answer

A general increase in prices and fall in the purchasing value of money over time

Answer

A decrease in the money supply

Answer

A rise in the stock market

Answer

A reduction in government spending

Question 2

What does GDP stand for?

Accepted Answer

Gross Domestic Product

Answer

General Distribution Product

Answer

Global Demand Price

Answer

Government Development Plan

Question 3

What is a 'budget deficit'?

Accepted Answer

When a government spends more money than it collects in revenue

Answer

When a government collects more revenue than it spends

Answer

When personal savings exceed personal spending

Answer

When a country exports more than it imports

Question 4

What is the primary role of the Federal Reserve in the United States?

Accepted Answer

To manage the country's monetary policy and regulate the banking system

Answer

To collect federal taxes

Answer

To pass federal spending bills

Answer

To audit government departments

Question 5

What does 'supply and demand' mean in economics?

Accepted Answer

The economic model describing how prices are determined by the availability of goods and consumer desire for them

Answer

The amount of money a government prints each year

Answer

The balance between imports and exports

Answer

A formula for calculating corporate profits

Question 6

What is 'compound interest'?

Accepted Answer

Interest calculated on both the initial principal and the accumulated interest from previous periods

Answer

Interest calculated only on the original principal

Answer

A fixed monthly bank fee

Answer

Interest paid only at the end of a loan term