Correct: A. Next best alternative

Opportunity cost is the fundamental economic concept that represents the value of the next best alternative that you give up when you make a choice. For example, if you spend 10 on a movie ticket, the opportunity cost isn't the 10, but rather the other thing you could have bought with that money, like a book or a meal.

Correct: C. Perfect competition

A market with "many sellers" typically refers to either "Perfect Competition" or "Monopolistic Competition." In these markets, no single business has enough power to control the price, which usually results in better quality and lower prices for consumers. This is the opposite of a monopoly.

Correct: C. Shortfall

In economics, a deficit occurs when a government's spending exceeds its revenue (usually from taxes) during a single year. To cover this gap, the government must borrow money by issuing bonds, which adds to the national debt. The opposite of a deficit is a "surplus."

Correct: B. WTO

The World Trade Organization (WTO) is the primary international organization that regulates and facilitates trade between nations. It provides a forum for governments to negotiate trade agreements and a place for them to settle disputes when one country feels another is being unfair in its trade practices.

Correct: B. All

In economics, "Capital" refers to the man-made resources used in the production of goods and services. This includes physical assets like factories, machinery, tools, and computers. It is different from "financial capital" (money), which is used to buy these physical assets.

Correct: A. Duopoly

A duopoly is a market structure where only two sellers (producers) dominate the market and compete with each other. A classic example is the global market for large passenger aircraft, dominated by Boeing and Airbus.

Correct: A. Opportunity Cost

Opportunity cost is the value of the next best alternative that you must give up to make a choice. For example, the opportunity cost of spending 10 on a movie ticket is the other things (like a lunch or a book) you could have bought with that same 10.

Correct: B. Consumer Price Index (CPI)

The Consumer Price Index (CPI) is the most commonly used measure of inflation. It tracks the average change over time in the prices paid by urban consumers for a "basket" of consumer goods and services, such as food, energy, and housing.

Correct: D. Development and poverty reduction

The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. Its primary mission is to end extreme poverty and promote shared prosperity.

Correct: D. Control of money supply and interest rates

Monetary Policy is the process by which a central bank (like the Federal Reserve) manages the money supply and interest rates to achieve goals like stable prices and low unemployment. By raising interest rates, they can "cool down" an overheating economy and lower inflation.

Correct: C. Restricting imports to protect domestic industries

Protectionism refers to government policies that restrict international trade to help domestic industries. This is typically done through tariffs, quotas, and subsidies.

Correct: A. Removing government restrictions on business

Deregulation is the reduction or elimination of government power in a particular industry, usually enacted to create more competition. For example, the US deregulated the airline industry in 1978, which led to a massive drop in ticket prices and the birth of "budget" airlines.

Correct: D. Calculate inflation/Real GDP

A Base Year is a specific year used as a point of reference for comparison when calculating economic indices like the Consumer Price Index (CPI) or Real GDP. The index for the base year is always set to 100.

Correct: D. Consumer's power to determine what is produced

Consumer Sovereignty is the idea that the consumer is the "king" of the market. Through their spending choices, consumers essentially "vote" for which products should be made and which businesses should survive.

Correct: B. Equality in value/status

Parity (specifically Purchasing Power Parity or PPP) is an economic theory that allows the comparison of the purchasing power of various world currencies to one another. It suggests that in the long run, exchange rates should adjust so that a basket of goods costs the same in every country.

Correct: D. Mixed Economy

A Mixed Economy is an economic system that combines elements of both capitalism (free markets) and socialism (government intervention). Almost every modern nation is a mixed economy, where the private sector produces most goods, but the government provides services like defense and education.

Correct: D. Tools/Machinery used in production

In economics, "Capital" refers to human-made goods used in the production of other goods and services. This includes machinery, tools, factories, and computers. It does not mean money (though people often use the word that way in daily life).

Correct: D. No government interference in economy

Laissez-faire is a French term meaning "let it be" or "leave it alone." In economics, it refers to a policy of minimal government interference in the economic affairs of individuals and society.

Correct: C. IMF

The International Monetary Fund (IMF) is the global organization that provides emergency loans to countries facing "balance of payments" crises. Headquartered in Washington, D.C., it works to foster global monetary cooperation and secure financial stability.

Correct: B. Loss of skilled workers to other countries

Brain Drain is a slang term for the emigration of highly trained or intelligent people from a particular country. This usually happens when professionals like doctors or engineers leave developing nations for higher pay and better conditions in wealthy nations.

Correct: B. Increase in value at each production stage

Value Added is the difference between the price of product or a service and the cost of the materials used to produce it. For example, the "value added" by a baker is the difference between the price of the bread and the cost of the flour and yeast.

Correct: A. Collective/Public ownership

Socialism is a political and economic theory of social organization which advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole. It aims for a more equal distribution of wealth and social welfare.

Correct: A. Official inspection of accounts

An Audit is an "independent examination of financial information" of any entity, whether profit-oriented or not, to ensure that the financial records are a fair and accurate representation of the transactions they claim to represent.

Correct: A. What you owe

Liabilities are defined as a company's legal financial debts or obligations that arise during the course of business operations. They are settled over time through the transfer of economic benefits including money, goods, or services. Common liabilities include loans, accounts payable, and mortgages.

Correct: C. End of a financial instrument's life

Maturity is the agreed-upon date on which an investment, such as a bond or certificate of deposit (CD), ends and the original "principal" amount must be paid back to the investor with interest.

Correct: B. Income return on an investment

Yield is the earnings generated and realized on an investment over a particular period of time. It is expressed as a percentage based on the investment's cost or current market value.

Correct: D. John Maynard Keynes

John Maynard Keynes wrote 'The General Theory of Employment, Interest and Money' in 1936. It is considered the foundation of modern macroeconomics and introduced the idea that government spending is necessary to fix recessions.

Correct: D. A cost that cannot be recovered

A Sunk Cost is a cost that has already been incurred and cannot be recovered. In rational economic decision-making, sunk costs should be ignored because they cannot be changed by future actions.

Correct: D. Contracting work to an outside supplier

Outsourcing is the business practice of hiring a party outside a company to perform services or create goods that were traditionally performed in-house. This is usually done as a cost-cutting measure, as it allows companies to take advantage of lower labor costs in other regions. It has become a hallmark of the globalized economy but is often controversial due to its impact on local jobs.

Correct: B. A loan to a firm or government

A Bond is a fixed-income instrument that represents a loan made by an investor to a borrower, typically a corporation or government. In exchange for the loan, the borrower agrees to pay back the principal at a later date plus regular interest payments. Bonds are generally considered safer than stocks but usually offer lower potential returns.

Correct: A. Government debt

Sovereign Debt (also known as national debt) is the amount of money a country's government has borrowed, typically through the issuance of bonds. Governments borrow to fund public services, infrastructure, or to stimulate the economy during a recession. If a country cannot pay back its debt, it is said to have "defaulted."