Economics concepts worksheet with answers

Inflation is:

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

A budget deficit occurs when:

1. AGovernment spending exceeds government revenue in a year
2. BTotal government debt falls
3. CA firm's costs exceed its revenue
4. DThe value of imports exceeds the value of exports in a year

Unemployment caused by people moving between jobs is called:

1. AFrictional unemployment
2. BStructural unemployment
3. CCyclical unemployment
4. DSeasonal unemployment

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

1. ALower borrowing and spending, reducing inflationary pressure
2. BHigher borrowing and spending, which adds to inflationary pressure
3. CA fall in the value of the euro
4. DAn immediate rise in GDP

If demand for a product is price inelastic, a price increase will:

1. AReduce quantity demanded to zero
2. BLeave total revenue unchanged
3. CIncrease total revenue
4. DDecrease total revenue

A savings account pays a nominal interest rate of 6% and inflation is 4%. The approximate real interest rate is:

1. A24%
2. B1.5%
3. C2%
4. D10%

A monopolist maximises profit where:

1. ATotal revenue is at its maximum
2. BPrice equals marginal cost
3. CAverage cost is at its minimum
4. DMarginal revenue equals marginal cost

In the Mundell–Fleming model with perfect capital mobility and a floating exchange rate:

1. AMonetary policy is effective but fiscal policy is largely ineffective
2. BBoth policies have no effect on output
3. CFiscal policy is effective, but monetary policy is largely ineffective
4. DBoth policies are equally effective