1. There is an output gap when
- productivity is continuously higher in one country than in another.
- the economy is continuously producing more capital goods than consumer goods over a period of time.
- national output is higher or lower than it would have been if the country had grown continuously at its trend rate of growth.
- unemployment occurs because the rate of economic growth increase above its trend rate of growth.
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2. The price elasticity of supply of a product will depend on
- the availability of factors of production.
- the incomes of consumers.
- whether the product is a luxury or a necessity.
- the extent to which the product is advertised.
3. An increase in imports of consumer goods is most likely to have been caused by a
- rise in household disposable income.
- rise in direct taxation.
- fall in the exchange rate.
- rise in household saving.
4. Good X is an inferior good. A rise in consumers' income is likely to lead to:
- A rise in demand and an increase in market price and quantity sold.
- A fall in demand and an fall in market price and quantity sold.
- An expansion of market supply following an increase in demand.
- A fall in demand and an increase in market price and quantity sold.
5. economics is primarily concerned with the study of
- how new wants and economic resources are produced.
- allocating scare resources to satisfy unlimited wants.
- how to make more effective use of resources through reducing wants.
- determining how the government should allocate resources.
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