Economics concepts worksheet with answers

Which of these is a barrier to entry into a market?

1. AMany small firms selling identical products
2. BLow start-up costs
3. CPerfect information for all buyers
4. DPatents held by existing firms

Macroeconomics studies:

1. AThe economy as a whole, such as inflation, unemployment and growth
2. BOnly the stock market
3. CThe decisions of individual households and firms in particular markets
4. DThe accounts of a single company

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 interest rate charged by banks
4. DThe total value of goods produced in a country

The law of diminishing marginal returns states that:

1. ALong-run average costs always fall as output rises
2. BAdding more of a variable input to a fixed input eventually lowers the extra output per unit added
3. CConsumers get less satisfaction as prices rise
4. DTotal output always falls as more workers are hired

Both supply and demand for a good increase. What can we say for certain about the new equilibrium?

1. ABoth price and quantity fall
2. BQuantity rises, but the change in price is uncertain
3. CBoth price and quantity rise
4. DPrice rises, but the change in quantity is uncertain

Nominal GDP grew by 5% and the GDP deflator rose by 2%. Real GDP grew by approximately:

1. A2.5%
2. B3%
3. C10%
4. D7%

In Spence's job market signalling model, education can be valuable to employers even if it does not raise productivity because:

1. AEmployers are required by law to hire graduates
2. BIt reduces the wages employers must pay
3. CIt guarantees that every graduate is highly productive
4. DIt is less costly for high-ability workers to acquire, so it reveals their type

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

1. A49 years
2. B7 years
3. C10 years
4. D70 years