Economics NECO past questions and answers

Economics NECO past questions and answers

Question: What is the term for the total value of all final goods and services produced within a country's borders in a specific time period?

a) Gross National Product (GNP)

b) Net Domestic Product (NDP)

c) Gross National Income (GNI)

d) Gross Domestic Product (GDP)

Answer: d) Gross Domestic Product (GDP)

Question: Which economic concept describes the idea that individuals and firms pursue their self-interest in a way that unintentionally benefits society as a whole?

a) Laissez-faire

b) Invisible hand

c) Keynesian economics

d) Marxism

Answer: b) Invisible hand

Question: In the context of supply and demand, what happens when the demand for a good increases while the supply remains constant?

a) Price increases and quantity decreases

b) Price decreases and quantity increases

c) Price and quantity both increase

d) Price and quantity both decrease

Answer: c) Price and quantity both increase

Question: Which type of inflation is caused by an increase in the cost of production that leads producers to raise prices?

a) Demand-pull inflation

b) Cost-push inflation

c) Hyperinflation

d) Stagflation

Answer: b) Cost-push inflation

Question: What is the term for the total amount of money in circulation in an economy, including currency and demand deposits?

a) M1

b) M2

c) M3

d) M4

Answer: a) M1

Question: Which economic theory emphasizes the role of government spending and taxation in influencing the economy?

a) Monetarism

b) Supply-side economics

c) Keynesian economics

d) Austrian economics

Answer: c) Keynesian economics

Question: What is the concept of the "tragedy of the commons" in economics?

a) Overproduction leading to market saturation

b) Government intervention in natural resource management

c) The depletion of shared resources due to individual self-interest

d) The inefficiency of a centrally planned economy

Answer: c) The depletion of shared resources due to individual self-interest

Question: Which economic indicator reflects the percentage of the labor force that is unemployed and actively seeking employment?

a) Labor force participation rate

b) Unemployment rate

c) Employment-population ratio

d) Underemployment rate

Answer: b) Unemployment rate

Question: What is the concept of "opportunity cost"?

a) The cost of production

b) The cost of goods and services

c) The cost of the next best alternative foregone

d) The total cost of an economic decision

Answer: c) The cost of the next best alternative foregone

Question: Which economic system is characterized by collective or government ownership and control of the means of production?

a) Capitalism

b) Socialism

c) Communism

d) Mixed economy

Answer: c) Communism

Question: What is the term for a situation where one party in a transaction has more information than the other, giving them an unfair advantage?

a) Asymmetric information

b) Perfect competition

c) Monopoly

d) Pareto efficiency

Answer: a) Asymmetric information

Question: What is the purpose of a sovereign wealth fund in the context of a country's economy?

a) To manage the national debt

b) To stabilize currency exchange rates

c) To invest government revenues for future generations

d) To regulate interest rates

Answer: c) To invest government revenues for future generations

Question: Which type of market failure occurs when a good or service is consumed by someone who did not pay for it?

a) Externalities

b) Public goods

c) Tragedy of the commons

d) Free rider problem

Answer: d) Free rider problem

Question: In the context of international trade, what does the term "trade deficit" mean?

a) Exporting more than importing

b) Importing more than exporting

c) Balanced trade

d) The exchange rate between two currencies

Answer: b) Importing more than exporting

Question: What is the role of the International Monetary Fund (IMF) in the global economy?

a) Regulating international trade

b) Providing humanitarian aid

c) Promoting economic stability and monetary cooperation

d) Enforcing antitrust laws

Answer: c) Promoting economic stability and monetary cooperation

Question: In the context of elasticity, what does an elastic demand curve indicate?

a) Consumers are responsive to price changes

b) Consumers are insensitive to price changes

c) The market is perfectly competitive

d) The good is a necessity

Answer: a) Consumers are responsive to price changes

Question: What is the term for a situation where one firm dominates the entire market for a particular good or service?

a) Oligopoly

b) Monopoly

c) Monopolistic competition

d) Perfect competition

Answer: b) Monopoly

Question: Which economic concept refers to the total value of a country's exports minus the total value of its imports?

a) Balance of payments

b) Trade surplus

c) Trade deficit

d) Current account

Answer: c) Trade deficit

Question: What is the purpose of a progressive tax system?

a) The tax rate decreases as income increases

b) The tax rate remains constant regardless of income

c) The tax rate increases as income increases

d) The tax burden is higher for lower-income individuals

Answer: c) The tax rate increases as income increases

Question: How does the concept of diminishing marginal utility apply to consumer behavior?

a) The more a consumer has of a good, the less satisfaction they derive from each additional unit

b) Consumers always experience increasing satisfaction with each additional unit of a good

c) The marginal cost of a good decreases as consumption increases

d) Consumer preferences remain constant regardless of the quantity consumed

Answer: a) The more a consumer has of a good, the less satisfaction they derive from each additional unit