Economics concepts worksheet with answers

A tariff is:

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

In economics, the short run is a period in which:

1. APrices cannot change
2. BAll factors of production can be varied
3. CThe firm must make a loss
4. DAt least one factor of production is fixed

Real GDP differs from nominal GDP because real GDP:

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

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

1. A8
2. B5
3. C1.25
4. D0.8

Rising consumer confidence would most likely:

1. AShift aggregate demand to the right
2. BHave no effect on the economy
3. CShift aggregate supply to the left
4. DShift aggregate demand to the left

A per-unit tax is placed on a good with very inelastic demand and elastic supply. Who bears most of the tax burden?

1. AProducers
2. BConsumers
3. CIt is always split equally
4. DThe government

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

1. A4 times marginal cost
2. B25% above marginal cost, as a share of price
3. C75% above marginal cost, as a share of price
4. DEqual to marginal cost

A lump-sum tax (a fixed amount, independent of output) is imposed on a profit-maximising monopolist. In the short run, its output will:

1. ARise to make up for the tax
2. BFall to zero
3. CFall, because the tax raises the firm's average cost
4. DStay the same, because MR and MC do not change