Economics concepts worksheet with answers

A point inside a country's production possibility frontier shows:

1. AThe maximum output the economy can produce
2. BUnemployed or inefficiently used resources
3. CAn output level that cannot be reached
4. DEconomic growth over time

Two goods are complements if:

1. ADemand for both rises when the price of either one of them rises
2. BOne can easily replace the other
3. CA rise in the price of one reduces demand for the other
4. DThey have the same price

Real GDP differs from nominal GDP because real GDP:

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

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. C10%
4. D2%

Rising consumer confidence would most likely:

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

A Gini coefficient of 0 indicates:

1. APerfect inequality of income
2. BZero economic growth
3. CPerfect equality of income
4. DZero unemployment

The Laffer curve illustrates that:

1. AHigher tax rates always increase tax revenue
2. BBeyond some point, raising tax rates can reduce total tax revenue
3. CTax revenue is unrelated to tax rates
4. DLower tax rates always reduce tax revenue, whatever the starting rate

A deadweight loss represents:

1. AThe tax revenue collected by the government
2. BThe profit of a monopolist
3. CLosses made by firms that are forced to leave the market in the long run
4. DThe loss of total surplus when output differs from the efficient level