Economics concepts worksheet with answers

Free printable Economics concepts worksheet: 8 problems from easy to exam level, with an answer key. Print it or save it as a PDF.

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1.Easy

The basic economic problem of scarcity means that:

  1. ASome goods are always unavailable in shops because firms produce too little
  2. BWants are unlimited but resources to satisfy them are limited
  3. CPrices are always rising over time
  4. DOnly poor countries need to make choices
2.Easy

Macroeconomics studies:

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

Two goods are substitutes if:

  1. AThey are always consumed together
  2. BA rise in income reduces demand for both goods at the same time
  3. CThey are produced by the same firm
  4. DA rise in the price of one increases demand for the other
4.Medium

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. AB has a comparative advantage in cars and A in wheat
  2. BA has a comparative advantage in cars and B in wheat
  3. CNeither country gains from trade
  4. DA has a comparative advantage in both goods
5.Medium

Stagflation is a combination of:

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

A sharp rise in world oil prices leading to higher inflation is an example of:

  1. ADemand-pull inflation
  2. BDisinflation
  3. CDeflation
  4. DCost-push inflation
7.Hard

Okun's law describes:

  1. AA positive relationship between inflation and nominal interest rates over time
  2. BThe link between money supply and prices
  3. CA negative relationship between output growth and changes in unemployment
  4. DThe relationship between tax rates and revenue
8.Hard

The "Taylor principle" says that, to stabilise inflation, a central bank should respond to a 1 percentage point rise in inflation by:

  1. AKeeping the nominal rate unchanged
  2. BCutting the nominal rate
  3. CRaising the nominal interest rate by more than 1 percentage point
  4. DRaising the nominal interest rate, but by less than 1 percentage point

Answer key

  1. 1. B · Wants are unlimited but resources to satisfy them are limited
  2. 2. B · The economy as a whole, such as inflation, unemployment and growth
  3. 3. D · A rise in the price of one increases demand for the other
  4. 4. B · A has a comparative advantage in cars and B in wheat
  5. 5. D · High inflation and high unemployment with low growth
  6. 6. D · Cost-push inflation
  7. 7. C · A negative relationship between output growth and changes in unemployment
  8. 8. C · Raising the nominal interest rate by more than 1 percentage point

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