Economics concepts worksheet with answers

A market with only one seller is called:

1. APerfect competition
2. BA monopoly
3. CAn oligopoly
4. DA monopsony

Deflation is:

1. AA fall in the value of the currency
2. BA reduction in government spending
3. CA slowdown in the rate of inflation, with prices still rising
4. DA sustained fall in the general price level

Real GDP differs from nominal GDP because real GDP:

1. AIs measured in a foreign currency
2. BExcludes government spending
3. CIs adjusted for changes in the price level
4. DIncludes only goods, not services

When a central bank buys government bonds from banks in open market operations, it usually:

1. AHas no effect on the money supply
2. BReduces bank reserves and so shrinks the money supply
3. CIncreases bank reserves and the money supply
4. DRaises tax revenue for the government

The marginal cost curve cuts the average total cost curve:

1. AAt the maximum point of average total cost
2. BAt the minimum point of average total cost
3. CNever, as the two curves are parallel
4. DWhere average total cost equals zero

A country imposes a tariff on imported steel. Which effect is most likely?

1. ADomestic consumers gain surplus
2. BDomestic steel prices fall and imports rise
3. CDomestic steel prices rise and domestic production increases
4. DThe world price of steel rises sharply for all countries that trade it

Which is a key difference between the CPI and the GDP deflator?

1. AThe CPI covers investment goods; the GDP deflator does not
2. BThe CPI includes prices of imported consumer goods; the GDP deflator covers only domestically produced goods
3. CThey always give exactly the same inflation rate
4. DThe GDP deflator includes imported goods; the CPI does not

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

1. AAlways maximise expected monetary value
2. BPrefer risk when facing gains of any size
3. CTreat losses and gains of the same size as equally important
4. DFeel losses more strongly than equal-sized gains