Economics concepts worksheet with answers

GDP measures:

1. AThe government's budget
2. BThe value of all exports only
3. CThe total wealth and savings held by a country's citizens and firms at the end of a year
4. DThe total market value of final goods and services produced in a country in a period

A cartel is:

1. AA single firm that controls the whole market for a product or service
2. BA group of firms that agree to coordinate prices or output
3. CA government agency that regulates prices
4. DA trade union that negotiates wages

Unemployment caused by people moving between jobs is called:

1. ASeasonal unemployment
2. BFrictional unemployment
3. CCyclical unemployment
4. DStructural unemployment

The price of petrol rises sharply. What happens to the demand curve for large cars?

1. AIt shifts to the left
2. BThere is a movement along it
3. CIt becomes vertical
4. DIt shifts to the right

If the ECB raises its main interest rate, the most likely short-term effect is:

1. AHigher borrowing and spending, which adds to inflationary pressure
2. BA fall in the value of the euro
3. CAn immediate rise in GDP
4. DLower borrowing and spending, reducing inflationary pressure

Unemployment benefits and progressive income taxes are called automatic stabilisers because they:

1. AKeep the government budget balanced in every year of the business cycle
2. BFix the exchange rate automatically
3. CPrevent all recessions from happening
4. DReduce fluctuations in demand without new government decisions

A regulator forces a natural monopoly to set price equal to marginal cost. The likely problem is that:

1. AThe firm makes very large profits
2. BThe firm makes a loss because average cost is above marginal cost
3. CConsumers face a shortage, because demand exceeds supply at that price
4. DOutput falls below the monopoly level

Why does the deadweight loss of a tax grow when the good's demand and supply are more elastic?

1. AElastic markets have no consumer surplus
2. BPrices do not change, so consumers bear the whole burden of the tax instead
3. CQuantity traded falls more, so more mutually beneficial trades are lost
4. DThe government collects more tax revenue