Economics concepts worksheet with answers

Fiscal policy uses:

1. AInterest rates set by the central bank
2. BGovernment spending and taxation
3. CExchange rate controls only
4. DTrade agreements only

A common rule of thumb defines a recession as:

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

Structural unemployment is caused by:

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

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

1. A5.3%
2. B50%
3. C95%
4. D5%

Using the expenditure approach, GDP equals:

1. AC − I + G − (X + M)
2. BC + I + G + X + M
3. CC + I + G + (X − M)
4. DWages + profits − taxes

In an oligopoly, firms are typically:

1. AFew and interdependent in their decisions
2. BCompletely unregulated by competition law
3. CMany and too small to affect the price
4. DA single seller in the market

According to the quantity theory of money (MV = PY), if velocity and real output are constant, a 5% rise in the money supply leads to:

1. AAbout a 5% rise in real output
2. BA 5% fall in velocity
3. CAbout a 5% rise in the price level
4. DNo change in prices

A liquidity trap is a situation where:

1. AInterest rates are near zero and further monetary expansion has little effect on demand
2. BBanks have no money left to lend
3. CThe central bank raises interest rates sharply to fight high and rapidly rising inflation
4. DInflation is very high and rising