Business & economics: Challenge your business and economic knowledge

Questions

1. What is the primary goal of a business in a free-market economy?
2. Define the term “inflation.”
3. Which organization is responsible for setting monetary policy in the United States?
4. What is the difference between gross profit and net profit?
5. Name the economic system where resources are owned and controlled by the government.
6. What does GDP stand for, and what does it measure?
7. What is a monopoly?
8. Which factor of production involves human effort and skills?
9. What is the concept of supply and demand?
10. Who is considered the father of modern economics, known for the book “The Wealth of Nations”?

Answers

1. To maximize profit and create value for shareholders.
2. Inflation is the general increase in prices of goods and services over time, leading to a decrease in purchasing power.
3. The Federal Reserve (or the central bank of the respective country).
4. Gross profit is revenue minus the cost of goods sold; net profit is gross profit minus all other expenses, taxes, and interest.
5. A command economy or planned economy.
6. Gross Domestic Product; it measures the total value of all goods and services produced within a country over a specific period.
7. A market structure where a single company or entity has exclusive control over a product or service, limiting competition.
8. Human capital or labor.
9. The economic principle that describes how the quantity of goods supplied and the quantity demanded interact to determine prices.
10. Adam Smith.