Economics concepts worksheet with answers

Macroeconomics studies:

1. AThe economy as a whole, such as inflation, unemployment and growth
2. BThe accounts of a single company
3. CThe decisions of individual households and firms in particular markets
4. DOnly the stock market

The Consumer Price Index (CPI) measures:

1. AThe interest rate charged by banks
2. BThe prices that firms pay for raw materials and other inputs used in their production
3. CThe total value of goods produced in a country
4. DThe changing cost of a fixed basket of goods and services bought by households

Which body sets monetary policy for the euro area?

1. AThe European Central Bank
2. BThe European Commission
3. CThe national finance ministries
4. DThe European Parliament

Rising consumer confidence would most likely:

1. AHave no effect on the economy
2. BShift aggregate demand to the left
3. CShift aggregate demand to the right
4. DShift aggregate supply to the left

Unexpectedly high inflation tends to benefit:

1. ABorrowers with fixed-rate loans
2. BPensioners on fixed nominal incomes
3. CLenders who receive fixed interest payments
4. DSavers holding cash

Stagflation is a combination of:

1. AHigh inflation and high unemployment with low growth
2. BDeflation and rapid growth
3. CLow inflation and low unemployment
4. DHigh growth and falling prices

According to prospect theory (Kahneman and Tversky), people typically:

1. ATreat losses and gains of the same size as equally important
2. BFeel losses more strongly than equal-sized gains
3. CPrefer risk when facing gains of any size
4. DAlways maximise expected monetary value

In the Solow growth model, sustained long-run growth in output per worker comes from:

1. ATechnological progress
2. BA higher saving rate alone
3. CPopulation growth
4. DGovernment budget deficits