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 total value of goods produced in a country
3. CThe prices that firms pay for raw materials and other inputs used in their production
4. DThe interest rate charged by banks

Deflation is:

1. AA sustained fall in the general price level
2. BA fall in the value of the currency
3. CA slowdown in the rate of inflation, with prices still rising
4. DA reduction in government spending

Structural unemployment is caused by:

1. AThe normal time that workers take to search for and move between jobs
2. BA mismatch between workers' skills or location and the jobs available
3. CSeasonal changes in demand for labour
4. DA temporary fall in aggregate demand

In perfect competition in the long run, firms earn:

1. AZero economic profit
2. BLarge economic profits
3. CLosses forever
4. DMonopoly profits

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

1. AIt is always split equally
2. BProducers
3. CThe government
4. DConsumers

In an oligopoly, firms are typically:

1. AMany and too small to affect the price
2. BFew and interdependent in their decisions
3. CA single seller in the market
4. DCompletely unregulated by competition law

The Fisher effect predicts that, in the long run, a permanent 2 percentage point rise in expected inflation will:

1. AHave no effect on nominal interest rates, so real interest rates fall by about 2 points
2. BLower nominal interest rates by about 2 points
3. CRaise nominal interest rates by about 2 points, leaving real rates unchanged
4. DRaise real interest rates by about 2 points

In the Solow growth model, sustained long-run growth in output per worker comes from:

1. AA higher saving rate alone
2. BPopulation growth
3. CTechnological progress
4. DGovernment budget deficits