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. COnly the stock market
4. DThe decisions of individual households and firms in particular markets

Structural unemployment is caused by:

1. AA temporary fall in aggregate demand
2. BThe normal time that workers take to search for and move between jobs
3. CA mismatch between workers' skills or location and the jobs available
4. DSeasonal changes in demand for labour

Which of these is a barrier to entry into a market?

1. AMany small firms selling identical products
2. BLow start-up costs
3. CPerfect information for all buyers
4. DPatents held by existing firms

In country A, 1 car costs 2 tonnes of wheat to produce; in country B, 1 car costs 4 tonnes of wheat. Which statement is correct?

1. ANeither country gains from trade
2. BA has a comparative advantage in cars and B in wheat
3. CA has a comparative advantage in both goods
4. DB has a comparative advantage in cars and A in wheat

The marginal cost curve cuts the average total cost curve:

1. AWhere average total cost equals zero
2. BAt the minimum point of average total cost
3. CAt the maximum point of average total cost
4. DNever, as the two curves are parallel

Rising consumer confidence would most likely:

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

The Marshall–Lerner condition states that a currency depreciation improves the trade balance if:

1. AThe country has a budget surplus
2. BExports and imports have zero price elasticity
3. CThe sum of the price elasticities of demand for exports and imports exceeds 1
4. DInterest rates rise at the same time

The time-inconsistency problem in monetary policy (Kydland and Prescott) is a key argument for:

1. AGovernments setting interest rates directly, especially before elections
2. BAbolishing central banks entirely
3. CIndependent central banks with a credible commitment to low inflation
4. DFixing the money supply at zero growth