Economics concepts worksheet with answers

The unemployment rate is calculated as:

1. AThe number of employed divided by the labour force
2. BThe number of unemployed divided by the total population
3. CThe number of job vacancies divided by the population
4. DThe number of unemployed divided by the labour force

Real GDP differs from nominal GDP because real GDP:

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

Structural unemployment is caused by:

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

A firm has spent €1 million on research for a product that now looks unprofitable. When deciding whether to continue, the €1 million should be:

1. AIgnored, because it is a sunk cost
2. BRecovered by raising prices
3. CAdded to the expected future costs
4. DTreated as the opportunity cost of stopping

Rising consumer confidence would most likely:

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

Overfishing in international waters is an example of:

1. AA Giffen good
2. BPrice discrimination
3. CThe tragedy of the commons
4. DA natural monopoly

The principal–agent problem arises when:

1. AThe government owns a firm
2. BTwo firms agree to fix prices
3. CAn agent acting for a principal has different goals and the principal cannot fully monitor them
4. DA buyer and seller have identical information

Purchasing power parity (PPP) suggests that, in the long run, exchange rates adjust so that:

1. AInterest rates are equal in all countries
2. BThe same basket of goods costs the same in different countries
3. CEvery currency ends up having the same nominal value as the US dollar
4. DTrade balances are always zero