Basic Economic Concepts – Multiple Choice Questions (MCQs)

1. 13. What is a capitalist economy?

   • A. An economy where the government controls all means of production
   • B. An economy where private individuals and businesses own the means of production and operate for profit
   • C. An economy based primarily on agriculture
   • D. An economy with no international trade

2. 14. What is a socialist economy?

   • A. An economy where private individuals own the means of production
   • B. An economy where the government owns and controls the major means of production and distribution
   • C. An economy driven by market forces alone
   • D. An economy with no government intervention

3. 15. What is a mixed economy?

   • A. An economy with no government intervention
   • B. An economy where all resources are state-owned
   • C. An economy that combines elements of both capitalist and socialist systems
   • D. An economy based solely on tradition

4. 16. What is a market economy?

   • A. An economy where prices and production are determined by supply and demand
   • B. An economy where the government sets all prices
   • C. An economy with no competition
   • D. An economy focused only on exports

5. 17. What is fiscal policy?

   • A. Government policy regarding taxation and spending
   • B. Central bank policy regarding interest rates
   • C. Regulations on international trade
   • D. Policies related to environmental protection

6. 18. What is monetary policy?

   • A. Government policy regarding taxation and spending
   • B. Central bank policy regarding the money supply and interest rates
   • C. Regulations on foreign investment
   • D. Policies related to labor markets

7. 19. What is a budget deficit?

   • A. Government revenue exceeds government expenditure
   • B. Government expenditure exceeds government revenue
   • C. Government revenue equals government expenditure
   • D. There is no government spending

8. 20. What is a budget surplus?

   • A. Government expenditure exceeds government revenue
   • B. Government revenue exceeds government expenditure
   • C. Government revenue equals government expenditure
   • D. There is no government revenue