Economics concepts worksheet with answers

The Consumer Price Index (CPI) measures:

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

A tariff is:

1. AA limit on the quantity of imports
2. BA ban on all foreign trade
3. CA subsidy for exporters
4. DA tax on imported goods

A budget deficit occurs when:

1. AThe value of imports exceeds the value of exports in a year
2. BA firm's costs exceed its revenue
3. CTotal government debt falls
4. DGovernment spending exceeds government revenue in a year

In a simple closed economy without taxes, the MPC is 0.8. The Keynesian spending multiplier is:

1. A1.25
2. B0.8
3. C5
4. D8

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

1. AReduces bank reserves and so shrinks the money supply
2. BHas no effect on the money supply
3. CRaises tax revenue for the government
4. DIncreases bank reserves and the money supply

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

1. ADisinflation
2. BDeflation
3. CDemand-pull inflation
4. DCost-push inflation

In the "Battle of the Sexes" coordination game, how many pure-strategy Nash equilibria are there?

1. AFour
2. BOne
3. CTwo
4. DNone

In the Bertrand model, two firms sell identical products with the same constant marginal cost and compete on price. The equilibrium price is:

1. AThe monopoly price
2. BEqual to marginal cost
3. CHalfway between monopoly price and marginal cost
4. DZero