Economics concepts worksheet with answers

Inflation is:

1. AA rise in the price of one product
2. BA sustained rise in the general price level
3. CAn increase in the money supply, whatever happens to prices
4. DA fall in unemployment

Marginal cost is:

1. AThe extra cost of producing one more unit of output
2. BTotal cost divided by the total number of units produced
3. CThe lowest price a firm can charge
4. DThe cost of the firm's buildings and machines

Unemployment caused by people moving between jobs is called:

1. ACyclical unemployment
2. BSeasonal unemployment
3. CFrictional unemployment
4. DStructural unemployment

A price ceiling set below the equilibrium price typically causes:

1. AA shortage
2. BAn increase in supply
3. CNo change in the market
4. DA surplus

Crowding out refers to:

1. AImports replacing domestic production
2. BToo many firms entering a market
3. COvercrowded public services
4. DHigher government borrowing raising interest rates and reducing private investment

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

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

Okun's law describes:

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

The Lerner index (P − MC)/P for a profit-maximising monopolist equals 1/|PED|. If |PED| = 4, the price is:

1. A75% above marginal cost, as a share of price
2. B25% above marginal cost, as a share of price
3. C4 times marginal cost
4. DEqual to marginal cost