Economics NABTEB exam past questions and answers

Economics NABTEB exam past questions and answers

Here they are;

Question: What is the primary function of central banks in an economy?

A) Fiscal policy

B) Monetary policy

C) Trade regulation

D) Social welfare

Answer: B) Monetary policy

Question: What is the law of demand in economics?

A) As prices increase, quantity demanded increases

B) As prices decrease, quantity demanded increases

C) As prices increase, quantity demanded decreases

D) As prices decrease, quantity demanded decreases

Answer: C) As prices increase, quantity demanded decreases

Question: Which market structure is characterized by a large number of sellers, similar but not identical products, and easy entry and exit?

A) Monopoly

B) Oligopoly

C) Monopolistic competition

D) Perfect competition

Answer: C) Monopolistic competition

Question: What is Gross Domestic Product (GDP)?

A) Total income of a country's residents and businesses

B) Total value of a country's exports

C) Total market value of all final goods and services produced within a country

D) Total government spending

Answer: C) Total market value of all final goods and services produced within a country

Question: Inflation is defined as:

A) Increase in the overall price level of goods and services

B) Decrease in the overall price level of goods and services

C) Stability in the overall price level of goods and services

D) Increase in the quantity of money in circulation

Answer: A) Increase in the overall price level of goods and services

Question: What is the opportunity cost of a decision?

A) The financial cost

B) The value of the best alternative forgone

C) The total cost

D) The fixed cost

Answer: B) The value of the best alternative forgone

Question: Which economic indicator is used to measure the average level of prices of goods and services in an economy?

A) Consumer Price Index (CPI)

B) Gross Domestic Product (GDP)

C) Unemployment rate

D) Interest rate

Answer: A) Consumer Price Index (CPI)

Question: What is the role of the World Trade Organization (WTO)?

A) Regulate global financial markets

B) Promote international trade and resolve trade disputes

C) Implement monetary policy

D) Provide financial aid to developing countries

Answer: B) Promote international trade and resolve trade disputes

Question: Define elasticity of demand.

A) The responsiveness of quantity demanded to a change in price

B) The total quantity demanded in the market

C) The responsiveness of quantity demanded to a change in income

D) The total revenue generated by a product

Answer: A) The responsiveness of quantity demanded to a change in price

Question: What is a progressive tax system?

A) Tax rate decreases as income increases

B) Tax rate increases as income increases

C) Flat tax rate for all income levels

D) No tax on income

Answer: B) Tax rate increases as income increases

Question: Define comparative advantage in international trade.

A) The ability to produce a good using fewer resources than another producer

B) The ability to produce all goods more efficiently than other countries

C) The ability to produce a good at a lower cost than another producer

D) The ability to produce a good with higher quality than another producer

Answer: A) The ability to produce a good using fewer resources than another producer

Question: What is the Phillips Curve in economics?

A) Shows the relationship between inflation and unemployment

B) Describes the relationship between supply and demand

C) Measures the elasticity of demand

D) Analyzes the impact of taxes on consumer behavior

Answer: A) Shows the relationship between inflation and unemployment

Question: Which type of unemployment occurs when there is a mismatch between the skills of workers and the requirements of jobs?

A) Frictional unemployment

B) Structural unemployment

C) Cyclical unemployment

D) Seasonal unemployment

Answer: B) Structural unemployment

Question: What is the quantity theory of money?

A) States that the money supply has a direct and proportional relationship with the price level

B) Asserts that the quantity of money is irrelevant to the economy

C) Claims that money has no impact on inflation

D) Proposes that the velocity of money determines the price level

Answer: A) States that the money supply has a direct and proportional relationship with the price level

Question: In international trade, what does a trade surplus indicate?

A) Exports exceed imports

B) Imports exceed exports

C) Balanced trade

D) No trade occurring

Answer: A) Exports exceed imports

Question: Define fiscal policy.

A) The control of the money supply by the central bank

B) Government's use of taxation and spending to influence the economy

C) The regulation of international trade

D) The determination of interest rates by the government

Answer: B) Government's use of taxation and spending to influence the economy

Question: What is the difference between a fixed exchange rate and a floating exchange rate?

A) Fixed exchange rates are determined by market forces, while floating rates are set by governments

B) Fixed exchange rates are flexible, while floating rates are stable

C) Fixed exchange rates are set by governments, while floating rates are determined by market forces

D) Both fixed and floating exchange rates are determined by international organizations

Answer: C) Fixed exchange rates are set by governments, while floating rates are determined by market forces

Question: What is the role of the Federal Reserve in the United States?

A) Regulate international trade

B) Control fiscal policy

C) Implement monetary policy and regulate banks

D) Set tax rates

Answer: C) Implement monetary policy and regulate banks

Question: Define externalities in economics.

A) Costs or benefits that affect parties not directly involved in an economic transaction

B) The difference between total revenue and total cost

C) The total value of a country's exports

D) The total income of a country's residents and businesses

Answer: A) Costs or benefits that affect parties not directly involved in an economic transaction