Economics concepts worksheet with answers

The Consumer Price Index (CPI) measures:

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

A common rule of thumb defines a recession as:

1. AAny month with rising unemployment
2. BA fall in the stock market of 10%
3. CTwo consecutive quarters of falling real GDP
4. DA year with inflation above 5%

Structural unemployment is caused by:

1. AA mismatch between workers' skills or location and the jobs available
2. BSeasonal changes in demand for labour
3. CA temporary fall in aggregate demand
4. DThe normal time that workers take to search for and move between jobs

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

1. AIncreases bank reserves and the money supply
2. BRaises tax revenue for the government
3. CHas no effect on the money supply
4. DReduces bank reserves and so shrinks the money supply

A country has 950 employed people and 50 unemployed people seeking work. Its unemployment rate is:

1. A5%
2. B5.3%
3. C50%
4. D95%

A minimum wage set above the equilibrium wage in a competitive labour market is predicted to cause:

1. AA shortage of labour
2. BA surplus of labour (unemployment)
3. CA fall in the wage rate
4. DNo change in employment

Using the "rule of 70", an economy growing at 7% per year will double its real GDP in about:

1. A49 years
2. B70 years
3. C7 years
4. D10 years

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

1. ANone
2. BFour
3. COne
4. DTwo