The Economy: A Comprehensive Guide for Sociology Students

Question 1

Behavioral economics considers psychological factors in economic decision-making. How can behavioral insights be used to improve economic policies?

Accepted Answer

Behavioral insights can be used to design economic policies that are more effective in achieving their goals.

Answer

Behavioral economics is a new and untested field of economics that has little relevance to economic policymaking.

Answer

Behavioral economics suggests that economic decision-makers are always rational and self-interested.

Question 2

When a government intervenes in the economy, it can raise ethical issues.  Which of these best describes this?

Accepted Answer

Whether government intervention is ethical depends on the situation and what it is trying to achieve.

Answer

Government intervention is always ethical because it aims to improve how well the economy works.

Answer

Government intervention is never ethical because it interferes with individual freedom and free markets.

Answer

Government intervention should only focus on environmental problems, because how well the economy works and social justice are less important.

Question 3

According to classical economic theory, which of the following policies is believed to promote economic growth?

Accepted Answer

Unrestricted free market principles

Answer

Extensive government intervention in the market

Answer

High levels of taxation and regulation

Answer

Protectionist trade policies

Question 4

Which of the following is considered a potential benefit of globalization?

Accepted Answer

Increased variety of consumer goods

Answer

Job losses in specific industries

Answer

Deterioration of environmental conditions

Answer

Diminished cultural diversity

Question 5

Which of the following measures is commonly used to assess economic inequality within a society?

Accepted Answer

Gini coefficient

Answer

Gross Domestic Product (GDP) per capita

Answer

Human Development Index (HDI)

Answer

Unemployment rate

Question 6

Which characteristic is **not** associated with a free market economy?

Accepted Answer

Government intervention in the economy

Answer

Private ownership of property

Answer

Freedom of choice for consumers and producers

Answer

Competition between businesses

Question 7

Which of the following **is not** a significant economic challenge currently faced by the UK?

Accepted Answer

Abundant natural resources

Answer

High public debt

Answer

Slow economic growth

Answer

Rising income inequality

Question 8

What is the primary factor driving inflation?

Accepted Answer

Increase in demand

Answer

Increase in supply

Answer

Decrease in demand

Answer

Decrease in supply

Question 9

Which of the following is **not** a potential benefit of economic growth?

Accepted Answer

Heightened environmental degradation

Answer

Elevated living standards

Answer

Increased employment opportunities

Answer

Reduced poverty

Question 10

What is the general relationship between economic growth and unemployment?

Accepted Answer

Positive correlation

Answer

Negative correlation

Answer

No correlation

Answer

Inverse correlation

Question 11

Which principle is central to the concept of sustainable economic development?

Accepted Answer

Meeting present needs without compromising future generations' ability to fulfill their own needs

Answer

Prioritizing economic growth over environmental protection

Answer

Exploiting natural resources without regard to the consequences

Answer

Reducing social inequality

Question 12

Which of the following is not a defining characteristic of a capitalist economic system?

Accepted Answer

Government control of the means of production

Answer

Private ownership of capital

Answer

Profit motive

Answer

Consumer sovereignty

Question 13

According to Karl Marx's theory, what is the primary driving force behind capitalism?

Accepted Answer

Class conflict

Answer

Technological innovation

Answer

Consumer demand

Answer

Government intervention

Question 14

Which of the following economic indicators measures the rate of change in the general price level?

Accepted Answer

Inflation

Answer

GDP

Answer

Unemployment rate

Answer

Exchange rate

Question 15

Which of the following is not a potential benefit of globalisation?

Accepted Answer

Reduced cultural diversity

Answer

Increased economic growth

Answer

Lower prices for consumers

Answer

Job creation in developing countries

Question 16

Which of the following is not a characteristic of a mixed economy?

Accepted Answer

Central planning

Answer

Private and public ownership of capital

Answer

Government regulation of the economy

Answer

Social welfare programs

Question 17

What is the primary purpose of an economic model?

Accepted Answer

To simplify reality and make predictions

Answer

To prove economic theories

Answer

To provide policy recommendations

Answer

To entertain economists

Question 18

Which fundamental principle of capitalism is characterized by individuals or organizations owning and controlling the means of production?

Accepted Answer

Private ownership of the means of production

Answer

Central planning of the economy

Answer

State ownership of all industries

Answer

Equal distribution of wealth

Question 19

What is the economic system term for a model that blends elements of both capitalism and socialism?

Accepted Answer

Mixed economy

Answer

Command economy

Answer

Traditional economy

Answer

Free market economy

Question 20

Which feature is characteristic of a progressive tax system?

Accepted Answer

Individuals with higher incomes pay a greater proportion of their income in taxes

Answer

All taxpayers pay an equal percentage of their income in taxes

Answer

Individuals with lower incomes pay a greater proportion of their income in taxes

Answer

It has a regressive nature

Question 21

Which characteristic is fundamental to a market economy?

Accepted Answer

Private ownership of productive resources

Answer

Centralized economic planning

Answer

Government control of pricing

Answer

Equitable wealth distribution

Question 22

Which policy is associated with Keynesian economics?

Accepted Answer

Raising government expenditure

Answer

Raising interest rates

Answer

Lowering taxes

Answer

Deregulating the market

Question 23

What is the primary objective of monetarism?

Accepted Answer

Controlling inflation

Answer

Achieving full employment

Answer

Reducing government spending

Answer

Promoting economic growth

Question 24

Identify the main criticism of trickle-down economics.

Accepted Answer

It does not benefit lower-income groups

Answer

It causes inflation

Answer

It stifles innovation

Answer

It increases unemployment

Question 25

Karl Marx believed that the main conflict in capitalist societies is between:

Accepted Answer

Workers and owners

Answer

Consumers and producers

Answer

Rich and poor

Answer

Government and citizens

Question 26

The Phillips curve illustrates the relationship between:

Accepted Answer

Inflation and unemployment

Answer

Wages and productivity

Answer

Interest rates and economic growth

Answer

Government spending and tax revenue

Question 27

Keynesian economics places significant emphasis on:

Accepted Answer

Government fiscal policy measures

Answer

Laissez-faire approach

Answer

Balanced budgets

Answer

Monetary policy tools only

Question 28

The economic concept of 'externalities' refers to:

Accepted Answer

Effects of economic activities that are not reflected in market prices

Answer

Government subsidies

Answer

Private property rights

Answer

Technological externalities

Question 29

Which of the following is NOT a distinguishing feature of a mixed economy?

Accepted Answer

Complete absence of private enterprises

Answer

Coexistence of public and private ownership of industries

Answer

Government regulation of the market

Answer

Free market competition

Question 30

According to Keynesian economic theory, which measure would be most effective in promoting economic growth during a recession?

Accepted Answer

Increasing government spending

Answer

Reducing government spending

Answer

Increasing interest rates

Answer

Raising taxes

Question 31

According to Karl Marx's theory, what is the fundamental cause of social inequality?

Accepted Answer

The struggle between different social classes over resources and power

Answer

Differences in educational opportunities

Answer

Variations in individual talents and abilities

Answer

Discrimination based on race, gender, or other factors

Question 32

In economics, what is the term used to describe costs or benefits that affect third parties who are not directly involved in a transaction?

Accepted Answer

Externalities

Answer

Market failures

Answer

Public goods

Answer

Negative externalities

Question 33

What is the ultimate aim of sustainable economic development?

Accepted Answer

Meeting the needs of the current generation without compromising the ability of future generations to meet their own needs

Answer

Rapidly increasing economic growth rates regardless of environmental consequences

Answer

Eliminating all forms of economic inequality

Answer

Protecting the environment at all costs, even if it hinders economic progress

Question 34

Keynesian economics argues that during a recession:

Accepted Answer

Government spending can stimulate economic growth

Answer

Fiscal policy should be used to reduce inflation

Answer

Monetary policy is the only effective tool to control inflation

Answer

The economy will always self-correct

Question 35

The Phillips curve illustrates the relationship between:

Accepted Answer

Inflation and unemployment

Answer

Wages and prices

Answer

Economic growth and inflation

Answer

Government spending and economic growth

Question 36

Which of the following is **not** a type of market structure?

Accepted Answer

Centrally planned economy

Answer

Perfect competition

Answer

Monopoly

Answer

Oligopoly

Question 37

Externalities are:

Accepted Answer

Costs or benefits that affect parties not directly involved in a transaction

Answer

Taxes and subsidies imposed by the government

Answer

Transactions that occur outside the market

Answer

Government regulation of the economy

Question 38

According to the classical economic model, the government's role in the economy should be:

Accepted Answer

Minimal (laissez-faire)

Answer

Interventionist

Answer

Socialist

Answer

Equal to that of the private sector

Question 39

Which of the following is a key difference between microeconomics and macroeconomics?

Accepted Answer

Microeconomics focuses on individual markets, while macroeconomics focuses on the economy as a whole

Answer

Microeconomics uses aggregate data, while macroeconomics uses individual data

Answer

Microeconomics is concerned with short-term economic fluctuations, while macroeconomics is concerned with long-term trends

Answer

Microeconomics is more theoretical, while macroeconomics is more empirical

Question 40

Which of the following is a key characteristic of a free market economy?

Accepted Answer

Private ownership and competition

Answer

Government regulation

Answer

Central planning

Answer

Price fixing

Question 41

According to Keynesian economics, which factor primarily stimulates economic growth?

Accepted Answer

Government spending and investment

Answer

Inflation

Answer

Tax increases

Answer

Interest rate increases

Question 42

What is the distinction between explicit and implicit costs?

Accepted Answer

Explicit costs involve payments made to others, while implicit costs do not

Answer

Implicit costs involve payments made to others, while explicit costs do not

Answer

Explicit costs are fixed costs, while implicit costs are variable costs

Answer

Implicit costs are fixed costs, while explicit costs are variable costs

Question 43

Which tool is used to measure changes in consumer prices over time?

Accepted Answer

Consumer Price Index

Answer

Gross Domestic Product

Answer

International Monetary Fund

Answer

World Bank

Question 44

What is the primary difference between microeconomics and macroeconomics?

Accepted Answer

Microeconomics examines individual markets, while macroeconomics examines the economy as a whole

Answer

Microeconomics focuses on businesses, while macroeconomics focuses on governments

Answer

Microeconomics studies short-term economic trends, while macroeconomics studies long-term trends

Answer

Microeconomics deals with the private sector, while macroeconomics deals with the public sector

Question 45

Which of the following is a defining characteristic of a monopsony?

Accepted Answer

There is only one buyer in a market

Answer

There are many buyers in a market

Answer

There is only one seller in a market

Answer

There are many sellers in a market

Question 46

Keynesian economics primarily emphasizes:

Accepted Answer

Increasing aggregate demand through government intervention to stimulate economic growth

Answer

Reducing government spending and increasing interest rates to control inflation

Answer

Deregulation and privatization to promote market competition

Answer

Monetary policy as the primary tool for economic management

Question 47

Which of the following countries is considered a 'command economy' based on the definitions discussed in class?

Accepted Answer

People's Republic of China

Answer

United States

Answer

United Kingdom

Answer

Germany

Question 48

The concept of 'externalities' in economics refers to:

Accepted Answer

Costs or benefits that are not reflected in market prices, such as pollution or education

Answer

Government regulations that restrict economic activity

Answer

The social costs of production, such as environmental degradation

Answer

The impact of technology on economic growth

Question 49

The concept of the 'invisible hand,' as introduced by Adam Smith, suggests that:

Accepted Answer

The pursuit of individual self-interest can lead to unintended benefits for society as a whole

Answer

Government intervention is necessary to correct market failures and promote social welfare

Answer

Economic growth is inevitable and will benefit all members of society equally

Answer

The free market is the most efficient way to allocate resources

Question 50

The sociological concept of 'social stratification' refers to:

Accepted Answer

The division of society into different layers based on factors such as income, education, and power

Answer

The process by which individuals move between different social strata

Answer

The role of the state in reducing social inequality

Answer

The impact of culture on economic outcomes

Question 51

Which characteristic is central to a market economy?

Accepted Answer

Private ownership of resources used for production

Answer

Centralized planning by the government

Answer

Equal distribution of wealth

Answer

Absence of competition

Question 52

Which economic system is characterized by collective ownership and central planning?

Accepted Answer

Command Economy

Answer

Market Economy

Answer

Mixed Economy

Answer

Traditional Economy

Question 53

What is the principal function of the price mechanism in a market economy?

Accepted Answer

Efficient allocation of resources

Answer

Directly regulating quantities of goods and services

Answer

Distributing wealth equally among citizens

Answer

Controlling the rate of inflation

Question 54

Which challenge do mixed economies commonly encounter?

Accepted Answer

Balancing market forces with government involvement

Answer

Preventing monopolies from gaining excessive power

Answer

Controlling inflation

Answer

Reducing unemployment

Question 55

What is the primary objective of macroeconomic policy?

Accepted Answer

Preserving economic stability and fostering growth

Answer

Redistributing wealth across society

Answer

Controlling inflation

Answer

Minimizing unemployment

Question 56

What does the Phillips Curve illustrate?

Accepted Answer

Relationship between inflation and unemployment

Answer

Relationship between wages and unemployment

Answer

Relationship between interest rates and inflation

Answer

Relationship between GDP and unemployment

Question 57

Which indicator is a key measure of economic growth?

Accepted Answer

GDP per person

Answer

Rate of inflation

Answer

Unemployment rate

Answer

Balance of trade

Question 58

Which of the following is NOT a defining trait of a free market economy?

Accepted Answer

Government intervention in the market

Answer

Private property ownership

Answer

Price determination through supply and demand

Answer

Profit maximization

Question 59

Identify the primary factor leading to economic inequality according to Marxist economic theory.

Accepted Answer

Capitalist exploitation of workers

Answer

Variations in educational attainment and skills

Answer

Government policies

Answer

Discrimination and prejudice

Question 60

Select the action that illustrates a monetary policy tool employed by central banks.

Accepted Answer

Interest rate adjustments

Answer

Printing money

Answer

Tariffs implementation

Answer

Increased government spending

Question 61

Specify the primary purpose of the International Monetary Fund (IMF).

Accepted Answer

Provision of financial aid to developing nations

Answer

Regulation of international trade

Answer

Implementation of environmental standards

Answer

Promotion of peace and security

Question 62

What is the primary objective of a trade union?

Accepted Answer

Protection and representation of workers' interests

Answer

Regulation of industry standards

Answer

Promotion of free trade policies

Answer

Consumer protection

Question 63

Identify the term used to describe the income disparity between the wealthiest and poorest individuals in a society.

Accepted Answer

Economic inequality

Answer

Social stratification

Answer

Wage gap

Answer

Wealth distribution

Question 64

According to Keynesian economics, which measure can stimulate economic growth during a recession?

Accepted Answer

Increase government spending

Answer

Reduce taxes

Answer

Raise interest rates

Answer

Reduce the money supply